Conjoint analyses can break-down large number of attributes into smaller bundles for evaluations and comparison. There attributes can also be compared in pairs: Respondents can be asked to indicate preferences between sets of two or more attributes. In this case, one set of attribute appear on left and another on the right on the questionnaire. This method is simpler as compared to evaluating 15 or 25 attributes simultaneously.
A conjoint analysis is able to breakdown utility to consumer at individual level as well as aggregate of all the responses. Numerous new techniques have been recently developed which help companies determine individual level utilities for choice-based conjoint, which provide companies with useful insight which is invaluable to the decision making when it comes to marketing, pricing and product placement.
The technique offers straightforward methods for experimentation with varying factors such as price, attributes, price etc. Before a product is launched the technique helps create a product profile, which can be altered to generate additional profiles for varying attributes. Consequently this helps businesses find the balance keeping in view the relative desirability of each alternative in a choice set and uses each attribute level uniformly throughout the survey. Conjoint analysis provides information that forms the basis of market segmentation, whereby a large homogenous market is divided into smaller groups bases on demographics, preference, age group, etc. Market segmentation enables businesses to target each homogenous group more effectively since their needs and preferences are recognized, and decisions are taken according.
Conjoint analysis can also be employed to exclusive focus on product features and attributes irrespective of price or brand name, hence enabling calculation of utility on individual basis in regard to the aforementioned specific features the companies seeks to evaluate. Moreover, the technique is widely used to measure the value of brand names in comparison to competing brands. Information can be obtained as to how strong a particular brand is in comparison to specific product and price. It helps businesses make decision based on their brand value in the market, since having a popular brand may not be enough as changes in price and features could impact demand.
Conjoint analysis is an important tool which helps in evaluating brand equity and estimate how market share is impact owing to various tradeoffs between brands, prices and some specific features. Conjoint analysis can be used to determine resource allocation, since businesses have already established which attributes are valued more by the consumers through the analysis. Consequently, companies can allocate the scare resources accordingly. They can choose to eliminate or remove features which are superfluous to the customers or not valued by the consumers. This will save costs for the business, and as already established, will not impact sales, since these particular products are not valued by the customers. Reduced cost would lead to more profitability for the businesses.
Conjoint analysis could be a great help when companies are in the process of re-modeling or revamping their products and services. When new version of a product is to be launched, the questionnaire could include all possible features or attributed a company could possible add. Through conjoint analysis it can be determined which features should be included given the important respondents attach to certain attributes. This will also help ascertaining the impact it would have on costs and revenues and overall profitability.