Conjoint Analysis: How to develop perfect product

Make data your unfair competitive advantage

Conjoint analysis is based on the idea the relative attributes and their levels considered jointly can be measured better than when considered in isolation. (fig. by author)

Conjoint analysis is a market research method used to measure customer preferences and the importance of various attributes of products or services. In this method, products or services (real or hypothetical) are presented to respondents (e.g. potential consumers) as a set of profiles. Each profile is described by attributes and their levels. Those attributes and their levels are explanatory variables. On the basis of the collected assessments (preferences) from consumers, a breakdown (decomposition) of total preferences is made, using statistical methods, by calculating the share of each attribute in the estimated total utility of the profile.

This way, marketers can identify which combination of attributes is going to perform on the market or which will be the most sought after combination in terms of the consumer’s point of view before actually introducing a new product.

Fundamental for conjoint analysis is the idea that attributes (and their levels) of the product can increase or decrease consumer’s willingness to buy it. Conjoint analysis measures how people value each attribute of a product.

Conjoint analysis is useful in all areas that involve human decision making, like: