Determining Consumer Preference (Part II)

In a previous post, we touched upon Conjoint Analysis, a technique used by marketing managers to determine a new products design, its target market, and pricing. To recap, Conjoint Analysis works under the assumption that a new product or service can be described in terms of a set of attributes, and further assumes that consumers can accurately rank or rate these attributes according to their individual preferences. Although variations of the method exist, the basic steps are: (1) determine a list of attributes, (2) obtain consumer feedback, (3) analyze the feedback & draw conclusions.

Analyzing the Feedback

The analysis of consumer feedback depends upon the techniques used to gather the data (mentioned in the previous post). I had intended to author a post describing all three methods (MONONOVA, Logit, Regression), but given their inherent complexity have decided to link to an overview of each method below instead for the mathematically inclined.

Conjoint Analysis Example

For the purposes of this example, we are going to use our very own service, SiphsMail. Our goal is to determine the combination of features most important to our target audience. To keep the example simple, I focus exclusively on two features: (1) sharing / word-of-mouth options, and (2) branding. By using these features we can construct a 2×3 matrix and ask our consumers to rank each item in the matrix from 1-6, where 1 is the most important.

We can then flip the rankings to assign each combination utility points, with higher points corresponding to greater utility and then construct the individual’s value system.

The beauty of this analysis is that it allows a product manager to assess the trade-offs consumers are willing to make. Who wouldn’t want to know that!

June 14, 2008 |

Determining Consumer Preference (Part II)

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