Hello Everyone !
You know sometimes, you read a thing and you feel that you already knew this just not by its proper name. I’ll tell you just another of those things which you already know about.
Let me ask you a question. How do you buy a product say for example a Mobile phone? A normal person would go to flipkart/amazon website, compare two or three phones and then maybe buy a real one. Now during this process of decision making, what you actually did was conjoint analysis.
Let me first explain you what is conjoint analysis. Conjoint Analysis is used by marketers to give them an idea of what actually consumers want. Conjoint Analysis asks for specific trade-offs, just like you do in real world. A product is basically broken down into a set of attributes and the aim is to find out how much value a consumer puts on each level of those attributes.
For eg- A girl pursuing engineering wants to buy a laptop would say that for her aesthetics of the product in question don’t matter. But at the back of mind, while comparing various products, she would actually buy that laptop, which looks good.
In the same case a boy would say, he wants a complete package- Good Processor, Min. 8 Gigs of RAM, Large Storage Space, an Nvidia Graphic Card. But deep down he also has priorities because he knows he won’t get all these in his budget.
This is what the companies want to find out- What attributes does the consumer actually value? Now how to find out this. It’s very simple. Just go and ask the consumer.
But the difficult part is that the consumers themselves don’t know the answer. It lies in their subconscious mind. So, the companies or the marketers perform conjoint analysis. They play with your brains, and you don’t even know it.
How do they do it? Suppose you want to do conjoint analysis for a laptop. You list down all the attributes of the product you want to look at. Say for example- Brand, Processor, RAM, Graphic Card
Each attributes has levels. Suppose
- Brand- Dell, HP, Apple (3 levels)
- Processor- I5,I7,AMD (3 levels)
- Price-Below 40k, 40k-60k, Above 60k (3 levels)
- RAM-4GB, 8GB (2 levels)
- Graphic Card-AMD, NVidia (2 levels)
Now you give them specific choices for exapmle
Choice 1- Dell Laptop, Price- 50k, Processor-i5, AMD Radeon Graphic Card, 8GB RAM
Choice 2- HP Laptop, Price- Below 40k, AMD Processor, AMD Graphic Car, 4GB RAM
Then you ask the consumer to choose from these two choices. The answers would tell you, what did the consumer actually prefer. Now, obviously you won’t find any meaningful data from just one question. You need to create multiple choice-based questions, to know the answer.
How many of these multiple choice-based questions are possible? This is simple permutation and combination. Just multiply no. of levels of each attribute. In previous example, no of ways you can give them a choice-based question would be 5778.
No. of ways a product can be made- 3(Brand)*3(Processor)*3(Price)*2(Graphic Card)*2(RAM)=108. No. of ways to choose any two out of these 108 products is 108C2=5778 . Now this is a very large number. A consumer won’t fill these number of choice-based questions for you. So you select just a few choices based on feasibility( For eg- A Macbook below 40k is not feasible, so just strike it off) of the product, your past experiences, etc.
After getting the responses, you calculate the importance of each of the levels and decide the overall attractiveness of the product.
Thus, by performing conjoint analysis, you get to know what value a customer gives to a particular attribute of the product and thus companies can focus on the things which actually matter to its customer.