Conjoint Analysis - Application Issues
Conjoint Analysis - Application Issues
Three areas of application appear especially promising. First, the insights that are gained into how consumers make choices within an existing market, coupled with information on the perceptions of the competitive alternatives, are valuable for guiding communications programs. Second, the analysis can suggest new product or service configurations with significant consumer appeal relative to competitive alternatives. Finally, the utility measurements can be used to develop strategic marketing simulations.12 These are used to evaluate the volume and profit implications of changes in marketing strategies. The following is a typical application, taken from Green and Wind.13
As a case in point, a large-scale study of consumer evaluations of airline services was conducted in which consumer utilities were developed for some 25 different service factors such as on-ground services, in-flight services, decor of cabins and seats, scheduling, routing, and price. Moreover, each utility function was developed on a route (city-pair and purpose-of-trip basis).
As might be expected, the utility function for each of the various types of airline service differed according to the length and purpose of the flight. However, in addition to obtaining consumers' evaluations of service profiles, the researchers also obtained information concerning their perceptions of each airline (that is, for the ones they were familiar with) on each of the service factors for which the consumers were given a choice.
These two major pieces of information provided the principal basis for developing a simulation of airline services over all mcycr traffic routes. The purpose of the simulation was to estimate the effect on market share that a change in the service configuration of the sponsor's services would have, route by route, if competitors did not follow suit. Later, the sponsor used the simulator to examine the effect of assumed retaliatory actions by its competitors.
Although the large majority of applications have been in the private sector, conjoint and trade-off analyses also are well suited to conduct cosi-benefit analyses of public policy decisions. A recent application (see Figure 19-4) to the problem of recruiting for the Armed Services Reserves, show; what can be done.
There are constraints on application, however. The most useful ap plications have been in complex, expensive, or risky product or service cat gories such as remote computer terminals, transportation modes, and m jor appliances; or with problems such as retail branch site selection. Even these categories, the requirement that each attribute be divided into discrete levels is a potential limitation. The difficulty is with such attributes as durability or styling, which are difficult to divide sensibly into levels becau-there are no objective standards to define "very safe" or "smart styling." T" value of trade-off analysis is limited further when used with products c r services having only one or two important attributes or where little explicit attention is paid to trade-offs because the costs or risks are low.
Three areas of application appear especially promising. First, the insights that are gained into how consumers make choices within an existing market, coupled with information on the perceptions of the competitive alternatives, are valuable for guiding communications programs. Second, the analysis can suggest new product or service configurations with significant consumer appeal relative to competitive alternatives. Finally, the utility measurements can be used to develop strategic marketing simulations.12 These are used to evaluate the volume and profit implications of changes in marketing strategies. The following is a typical application, taken from Green and Wind.13
As a case in point, a large-scale study of consumer evaluations of airline services was conducted in which consumer utilities were developed for some 25 different service factors such as on-ground services, in-flight services, decor of cabins and seats, scheduling, routing, and price. Moreover, each utility function was developed on a route (city-pair and purpose-of-trip basis).
As might be expected, the utility function for each of the various types of airline service differed according to the length and purpose of the flight. However, in addition to obtaining consumers' evaluations of service profiles, the researchers also obtained information concerning their perceptions of each airline (that is, for the ones they were familiar with) on each of the service factors for which the consumers were given a choice.
These two major pieces of information provided the principal basis for developing a simulation of airline services over all mcycr traffic routes. The purpose of the simulation was to estimate the effect on market share that a change in the service configuration of the sponsor's services would have, route by route, if competitors did not follow suit. Later, the sponsor used the simulator to examine the effect of assumed retaliatory actions by its competitors.
Although the large majority of applications have been in the private sector, conjoint and trade-off analyses also are well suited to conduct cosi-benefit analyses of public policy decisions. A recent application (see Figure 19-4) to the problem of recruiting for the Armed Services Reserves, show; what can be done.
There are constraints on application, however. The most useful ap plications have been in complex, expensive, or risky product or service cat gories such as remote computer terminals, transportation modes, and m jor appliances; or with problems such as retail branch site selection. Even these categories, the requirement that each attribute be divided into discrete levels is a potential limitation. The difficulty is with such attributes as durability or styling, which are difficult to divide sensibly into levels becau-there are no objective standards to define "very safe" or "smart styling." T" value of trade-off analysis is limited further when used with products c r services having only one or two important attributes or where little explicit attention is paid to trade-offs because the costs or risks are low.
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