Business Optimization Tips: Choice-Based Conjoint2017-03-10T17:05:58.000Z 2017-03-10T17:05:58.000Z There are many goods and services available on the market. How does a customer make a choice among a multitude of similar products? And, more importantly, how do you, as a business person, decide what to sell? Let's talk about CBC.
Conjoint Analysis (conjoint comes from "considering jointly") is a statistical method, used to study consumer preferences. It's used to define the best configuration of new or existing goods and services. The idea is to compare the product attributes to identify those that have the most significant impact on purchasing decisions. This means that the results you get can help you to develop and improve your goods or services, research market prices, as well as competitive positioning and market segmentation. Conjoint Analysis is also a great instrument to evaluate the value of your brand - the indicator that is extremely important for the business.
How does Conjoint Analysis work?
Step 1: Attributes & Questions
The goods or service is described as a set of attributes. Attributes are the characteristics of the product, for example, size, format, brand, price, etc. The number of attributes should not exceed 7 or 8. Each characteristic can have a level, ranging from 2 to 5.
When respondents are shown a set of products, their prototypes, mock-ups, or even simple images of what the product will look like, they have to make a choice. Respondents can give preference to one or the other product/service, assign ranks or ratings to the presented product options.
The idea is to make sure the similarities and differences in the presented options are such that customer can easily compare them and make a choice.
Step 2: Data Analysis
The next logical step is to analyze the data that we have collected from our respondents. Based on the results of the questionnaires, you can identify the pain points and things you can do to improve and optimize your existing product/service. Or, alternately, you can create a new one that fits the expectations and requirements.
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What's a Choice-Based Conjoint Model?
Having described what the Conjoint Analysis is, let's move to the choice-based conjoint model. The idea here is similar, but we're asking the respondents to choose from combinations of the products' attributes.
|Brand||Company #1||HUSPI||Company #3|
|Performance||Quick development||Fast and good quality||Fast and good quality|
|Action||Choose this||Choose this||Choose this|
Which company would you choose for your product's software development?
Therefore, the difference here is that the respondent has to choose from the grouped options, which models real-life consumer behavior.
Besides, real-life situations often call for a compromise - would you like a cheaper version, but not as good, or more expensive, but be sure that everything will be just as you imagine it to be? (Or, you get to find the Golden Middle in this, and you get both excellent prices as well as good quality and deadlines...)
So there you go - this is the Choice-based Conjoint Analysis.
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