CONJOINT ANALYSIS

• Conjoint refers to the notion that relative value of

any phenomenon(product in most of the cases)can
be measure jointly
• Conjoint analysis has got wide application in
marketing research and product development.
• Conjoint analysis determines the relative
importance of various product attributes
(attached by the consumers to different product
attributes) and values(utilities) attached to
different levels of these attributes.
• Conjoint analysis addresses the customers evaluation of
various tangible and intangible attributes offered by a
particular product.
• Eg: purchasing of color Television by customer. The
attributes are
brand image,
flat screen,
screen size,
Sound quality,
price quality
price of different models and etc.,
• Conjoint study is an attempt to measure the value of each
attribute on the basis of the responses provided by the
customers in a systematic way
• Conjoint study uses the customer’s responses to infer
their value system about the attributes of a product
instead of using self-evaluation of the consumer’s
preference of different product attributes.

• CONCEPT OF PERFORMING CONJOINT ANALYSIS:

• The respondent is supposed to make trade-off judgments
• It is based on the assumption that subjects evaluate the
value or utility of a product or service or idea by
combining the separate amount of utility provided by each
attribute.
• Eg: suppose there are two different brands for consumers
for choosing, say, Brand A and Brand B based on
attributes brand image, sound quality and picture
quality.(the data may be collected n a 5 – point rating
scale)
Attributes Brand A Brand B
Brand image 3 4
sound quality 3 5
Picture quality 5 2

Consumer may be wiling to trade-off the superiority of Brand

B on brand image and sound quality over the superiority of
Brand A on picture quality because utility may be attached to
picture quality.
Utility function:
• The utility consumers attach to the levels of each
attribute is determined by a part-worth or utility
function.

Steps in conducting Conjoint analysis:

1. Problem formulation
2. Trade-off data collection
3. Metric versus non-metric input data
4. Result analysis
5. interpretation
Problem formulation:
• Identify the various attributes and attribute levels
(Attributes can be identified from discussion with the
management or industry expert, secondary data, pilot
survey, etc.)
• The number of attributes used in the analysis should be
selected with care.(between six or seven on an average)
• The number of attribute levels determines the number of
parameter that will be estimated, and consequently, it
affects the consumer’s preference of an attribute and level.
• It is important to understand that the model is linear
depending on the number of the most desired attributes.
eg: while purchasing Air conditioner, consumer preferences
may be low price or less electricity bill indicating a linear
relationship between the utilities and the attribute level.
• The attribute level selected will affect the consumer’s
process of evaluation.

• Eg: if the price of the colour television varies at Rs. 500,Rs.

700 and Rs. 900,the price will be relatively unimportant as
compared with the situation when the price varies at
Rs.1000, Rs. 2500 ad Rs. 4000.

• Eg:Three attributes for purchasing Colour Tv set may be,

Screen, Sound quality, and price.
• The levels of Screen may be Flat, Semi-flat, No flat
• The levels of Sound quality may be Superior quality,
High quality, Average quality
• The levels of price may be Rs.10,000, Rs.15,000, Rs.
20,000

• Therefore, Attribute levels should be considered that

exist in the market to enhance the consumer’s
believability of the evaluation task.
Trade-off data collection:
• Two broad approaches are available to construct conjoint
analysis stimuli,
1.Pair-wise (two factor ) approach
2.full-profile approach.
Pairwise approach is considering two attributes at a time for
their trade-off judgment
Full-profile approach is of considering all attributes and
making an overall judgment.
Both methods have their own utility, but full-profile approach
is the most widely method because it gives more realistic
description of stimuli by defining the levels of the factors and
possibly taking into account the potential environmental
correlation between the factors in real stimuli.
• In case of 3 attributes and three levels of each attribute,
there will be 3x3x3 =27 profiles.

Metric versus Non-metric input data:

• Conjoint analysis data can be of both the forms: metric

data and non-metric data.
• For metric data, the respondents indicate rating
• For Non-metric data, the respondents indicate ranking.
• In conjoint analysis, the dependent variable is consumer
preference or intention to buy a product.(rating or ranking
provided by the customers for buying a product).
Result Analysis and interpretation:
• In this step, A proper technique is selected to in the analyze
the input data
• The conjoint analysis model is
U(x) = σ𝑚 σ𝑘𝑖
𝑖=1 𝑗=1 𝑢𝑖𝑗 𝑥𝑖𝑗
U(x) = utility of an alternative,
Uij = the part worth contribution (utility of jth level of ith
attribute)
ki = number of levels for attribute I
m = number of attributes
xij = 1 if the jth level of the ith attribute is present and
xij = 0 otherwise
• Importance of an attribute Ri can be defined as the range
of part-worth contribution, across the levels of attributes
Importance of an attribute (Ri) = Maximum(uij) - Minimum(uij)

Relative importance of an attribute = σ𝑚𝑅𝑖 𝑅𝑖

𝑖=1

Where σ𝑚
𝑖=1 𝑅𝑖 = 1

To estimate the model, the most popular and widely applied technique
is dummy variable regression technique.
In conjoint analysis :
dummy variables are treated as independent or explanatory variables
Preference rating obtained from the respondent is treated as
dependent variable.
• If the ith attribute has ki levels then it is coded in ki – 1
dummy variables.
• To analyze the data, ordinary least square regression is
applied on dummy variables.