In one of the editions of “Time” magazine from July 2014, Charlotte Alter has presented a list of new smart gadgets which are supposed to facilitate day to day life and make our energy bills lower.
Just to mention a few, the one which really caught my attention was the raven window, a specially designed window treatment which controls how much natural heat enters a room, cutting heating and cooling costs by at least 30%. Another interesting gadget is Enduro-Shield, a protective coating which can be applied to glass, tile and countertops to repeal grime, meaning your surfaces will require fewer cleanings, involving less use of toxic cleaning solutions and paper towels.
But how are those gadgets created so to fit people’s tastes and solve their problems? How to make the right product for the people who value different features?
The reason lies in the conjoint analysis, generally known as a popular marketing and research technique for determining what features a product should have and which pricing strategy should be used in order to make it profitable for both the sellers and the customers.
Below we will explain the process of conjoint analysis step by step.
Let’s suppose that we would like to market a freezer. From our own personal experience, we can more or less establish the main features that people expect the product to have. I would probably chose savings on electricity, net capacity as well as energy rating. We can also take a more simpler perspective and set the main product attributes in terms of appearance, size, price, etc., depending on the product we want to introduce to the market.
The next step in the conjoint analysis, after choosing the basic features of the product, will consist in establishing / choosing some values for each of the enumerated features. You can choose to present the combination of attributes in different forms, to your respondents. Verbal presentations, paragraph descriptions and pictorial presentations are the main options to choose from. However, it has been statistically proven that people respond more honestly to the pictorial presentations.
Deciding on how you are going to collect the answers from your respondents is the following step in the conjoint analysis. You can take each response from each individual and analyze them individually, or you can collect all the responses into a single utility function. However, from my experience as a marketing consultant, the best way to collect the answers is to divide your respondents in segments based on different criteria, usually for having the same preferences.
The final step in the conjoint analysis consists in determining the technique to be used for analyzing the collected data.
The conjoint analysis gives you the power of identifying and evaluating what the market wants. Another advantage of this tool is that it can be applied in many industries. Also, it can be applied in different departments across the company such as product development, competitive positioning, product line analysis.
Allowing a subset of the possible combinations of product features to be used to determine the relative importance of each feature in the purchasing decision, can be successfully applied, if the respondents can provide rational answers, meaning that consumer’s purchase decision should be rational. If the consumer’s purchase decision is under impulse, than the conjoint analysis is not for you, as its results will not prove to be relevant for your purposes.