Conjoint Analysis

Sawtooth Software

RESEARCH PAPER SERIES

Understanding Conjoint Analysis in 15 Minutes

Joseph Curry, Sawtooth Technologies, Inc. 1996

© Copyright 1996 - 2001, Sawtooth Software, Inc. 530 W. Fir St. Sequim, WA 98382 (360) 681-2300 www.sawtoothsoftware.com

Understanding Conjoint Analysis in 15 Minutes

Joseph Curry (Originally published in Quirk’s Marketing Research Review) Copyright 1996, Sawtooth Software

Conjoint analysis is a popular marketing research technique that marketers use to determine what features a new product should have and how it should be priced. Conjoint analysis became popular because it was a far less expensive and more flexible way to address these issues than concept testing. The basics of conjoint analysis are not hard to understand. I’ll attempt to acquaint you with these basics in the next 15 minutes so that you can appreciate what conjoint analysis has to offer. A simple example is all that’s required. Suppose we want to market a new golf ball. We know from experience and from talking with golfers that there are three important product features: Average Driving Distance Average Ball Life Price We further know that there is a range of feasible alternatives for each of these features, for instance: Average Driving Distance 275 yards 250 yards 225 yards Average Ball Life 54 holes 36 holes 18 holes Price $1.25 $1.50 $1.75

Obviously, the market’s “ideal” ball would be: Average Driving Distance 275 yards Average Ball Life 54 holes Price $1.25

and the “ideal” ball from a cost of manufacturing perspective would be: Average Driving Distance 225 yards Average Ball Life 18 holes Price $1.75

assuming that it costs less to produce a ball that travels a shorter distance and has a shorter life. Here’s the basic marketing issue: We’d lose our shirts selling the first ball and the market wouldn’t buy the second. The most viable product is somewhere in between, but where? Conjoint analysis lets us find out where. A traditional...