Small Sample Quantitative Methods Conjoint Analysis

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```					Small Sample Quantitative Methods
Conjoint Analysis

COMM 3710
November 21, 2002
Tim Larson
Small Sample Quantitative Techniques
•Two choices when it comes to conducting research
-Collect a lot of information from a few
individuals
-Collect less information across more individuals.
•Rule of Thumb
individual, the fewer the number of cases you will
need in order to achieve a stable sample estimate.
• Conjoint analysis uses this rule of thumb by
measuring a phenomenon systematically in
every possible light; hence, the statistical
stability without the large, expensive
samples.
Scales and Use of Sophisticated
Analytical Procedures
• If you can assume that the differences in the way
people standardize their perceptions and the
widths of the intervals will average themselves out
--in other words, those who are more stringent
balance out those who are less stringent-- then you
can treat scales as though they were ratio scales
and calculate averages using the more powerful
analytical quantitative statistical procedures.
• For most marketing and B2B market research
purposes, attitude scales are used as though they
are ratio- and equal-interval scales.
Conjoint Analysis
(CA)

• A technique that quantifies people’s preferences or
priorities when faced with the task of evaluating a set of
products or services and choosing the most preferred
alternative.
• Parallels a purchase situation
– Product purchase example
• Computer brands and descriptors:
–   HD memory
–   monitor size
–   RAM
–   OS
–   service
–   software
–   peripherals
Conjoint Analysis

•Important first step in conjoint analysis is to determine the
appropriate features to test for. (Qualitative research)

•Second step is to determine an appropriate number of
realistic levels (attribute configurations) for each feature.
Basics of Conjoint Analysis
http://www.surveysite.com/newsite/docs/conjoint.htm

•Suppose you wanted to book an airline flight and you had a choice
of spending \$400 or \$700 for a ticket. Which would you choose?

•What if the only consideration was sitting in a regular or an
extra-wide seat? Likely would choose the extra-wide seat.

•Suppose you can take either a direct flight which takes three hours
real purchase situations, consumers do Choice is clear.
•In or a flight that stops once and takes five hours. not make choices based
on a single attribute like comfort or cost.
•Consumers examine a range of features or attributes and them
make judgments or trade-offs to determine their final purchase
choice.
•Conjoint analysis examines the trade-offs to determine the
combination of attributes that will be most satisfying to the customer.
A Practical Example of Conjoint Analysis
http://www.surveysite.com/newsite/docs/conjoint-tutor.html

Conjoint analysis presents choice alternatives between products/
services defined by sets of attributes.

For example:
•Would you prefer a flight with regular seats, that costs \$400
and takes 5 hours, or a flight which costs \$700, has extra-wide
seats and takes 3 hours?

•If, for example, we see seat comfort, price and duration
are the only relevant attributes, there are potentially eight
flight choices.
Conjoint Analysis
Airline Flight Example

Choice     Seat         Price     Duration
Comfort

1          Extra-wide   \$700      5 hours
2          Extra-wide   \$700      3 hours
3          Extra-wide   \$400      5 hours
4          Extra-wide   \$400      3 hours
5          Regular      \$700      5 hours
6          Regular      \$700      3 hours
7          Regular      \$400      5 hours
8          Regular      \$400      3 hours
Utility or “Part-worth”
•Utility is defined as a number which represents the value or relative
“worth” consumers place on an attribute or “part.”.
•A low utility indicates less value; a high utility indicates more value.

Hypothetical utilities for an individual consumer

ATTRIBUTE              UTILITY         RANGE
Duration
3 hours              42              20
5 hours              22              (42MINUS 22=20)

Comfort seat          15               3
extra-wide           12              (15 MINUS 12= 3)
regular

Cost
\$400                 61              56
\$700                  5              (61 MINUS 5= 56)
CHOICE SIMULATIONS
Using the Computer

•Reveals consumer preference for specific products defined by the
researcher.

Flight 1:   \$300          5 hours        two stops     meal
Flight 2:   \$400          4 hours        one stop      snack
Flight 3:   \$500          3 hours        direct        no meal

Possible Questions:
• Will a price change of \$50 influence the consumer’s choice?
•Would the consumer be willing to pay \$50 more if s/he got a meal?
Data Collection
Data collection involves showing respondents a series of cards that
contain a written description of the product or service.

A typical card examining the business traveler might look like
the following:
“On your next business flight overseas, how likely would you be to
choose a flight that has all the following characteristics? Please circle
the appropriate number from 1 to 10 to indicate your feelings.’
•One stop en route
•Extra-wide seats
•Departure time: before 8:00 AM
•“Double” mileage points
•\$200 fee to change ticket
Would never                              Would definitely
choose this flight                      choose this flight
1 2       3     4    5     6     7   8    9    10
FAX Example
See Exhibit 5.4 Hypothetical Conjoint
Output for FAX that follows.

•Price is the most important feature in the
purchase decision for this one individual, and
the lowest price of \$499 is the most preferred
price point.
•Print speed is next in importance, and the highest
speed of 10ppm speed is the most preferred
speed point.
•Color and brand name have less impact on
preference because the utilities are much lower
for these features
(Block & Block)
5.4 Hypothetical Conjoint Output for FAX Machine
Partsworth      Difference   Relative Weight
Paper cutter
Yes                     .6
No                     .01        .59        18%
Telephone handset
Yes                    .5
No                     .1         .4          12
Yes                    .8
No                     .5         .3          9
Print speech
5ppm                   .3
8ppm                   .9
10ppm                 1.0         .7          21
Brand name
Sharp                  .4
Panasonic              .5
Brother                .5
HP                     .6         .2          6
Color
Black                  .1
Putty/Beige            .2
Gray                   .2         .1          6
Price
\$499                  1.5
\$699                   .9
\$899                   .5         1.0         31
Total Utility      3.29        100%
FAX Example
See Exhibits 5.5 & 5.6 that follow.

•Partsworth diagrams for hypothetical FAX example
– A change in price from \$499 to \$699 greatly
reduces preference, and with a price point of
\$899, preference dips considerably lower.
– Difference between highest and lowest utility is
an indication of the impact of this feature on
overall preference.
– Note that the “elasticity” of the color feature is
small and flat while price elasticity is steep.
(Block & Block)
5.5 Partworth Diagrams for Hypothetical FAX Example

Preference
Utility
Black    Beige   Gray
Yes            No                      Yes              No

Sharp Panasonic Brother Hp
Yes           No                                                              \$499      \$699    \$899
Brand Name
Telephone Handset                                                                      Price
Preference
Utility

5ppm     8ppm     10ppm
Print Speed
5.6 Partworths for FAX Machine
35
31
30

25
21
20
18
15
12
10                           9
6
5
3
0   Paper     Teleph one   An swering    Print    Brand   Color    Price
Cu tter    Handset      Machine      Sp eed   Name
Alternative Measurement Techniques in
Conjoint Analysis
• The paired comparison
– Two alternatives presented
• Rating Scales
– Added to paired comparison to get more data
• Conjoint simulation using a computer
– Lets you estimate the ideal feature
combinations
• Computer-aided Interviewing
– Computer models used to present and compute conjoint
analysis research.
• Full-profile conjoint analysis
“Two -Factor Approach”
Paired Comparisons
See Exhibit 5.8 Trade-Off Conjoint Matrices that follows.

– Respondents are presented with a series of
combinations based only on pairs of features
– Requires respondent to make choices about every
combination of features and levels.
– This intense data collection adds to the stability of the
utilities for even small samples.
– Works best when features do not interact with one
another, or in others words, the preference or utility of
one variable compared to another does not depend on
the circumstances of a third feature.
– Computer model analyzes the data to get utility values
(Block & Block)
Telephone                                   Price
Print    With    Without            Print     \$499      \$699   \$899
Speed    Handset Handset            Speed

5ppm                                5ppm      3
8ppm      2
8ppm     3          4               10ppm     1         4

10ppm    1          2
Price
Telephone   \$499            \$699       \$899
These are merely
examples of possible
responses.                With        1               3          4
Handset
Without     2
Handset
Full Profile Conjoint Analysis or
“Multi Factor Approach”
See Exhibit 5.9 - Product Descriptions in a
full profile conjoint analysis that follows.

•Respondents are presented with a complete profile of
alternative products, each alternative profiled in terms
of information for each and every feature of interest.

•Rather than pairs of features, in full profile CA the
individual is confronted with many alternatives for
which s/he must consider all the various features before
indicating a rank-ordered preference among them.

•Using computers to model and crunch the data, full-
profile CA is the dominant method used today.
(Block & Block)
Product Description in a Full Profile Conjoint Example
Card   Print Speed         Handset              Price
1      5ppm                Yes                  \$499
2      5ppm                Yes                  \$699
3      5ppm                Yes                  \$899
4      5ppm                No                   \$499
5      5ppm                No                   \$699
6      5ppm                No                   \$899
7      8ppm                Yes                  \$499
8      8ppm                Yes                  \$699
9      8ppm                Yes                  \$899
10     8ppm                No                   \$499
11     8ppm                No                   \$699
12     8ppm                No                   \$899
13     10ppm               Yes                  \$499
14     10ppm               Yes                  \$699
15     10ppm               Yes                  \$899
16     10ppm               No                   \$499
17     10ppm               No                   \$699
18     10ppm               No                   \$899
Conjoint Analysis Demonstration

http://www.surveysite.com/newsite/docs/conjoint-example.html
Summary Conjoint Basics
• Involves presenting respondents with alternative
choice situations and having them rank the
alternatives.
• Computer model “decomposes” these preferences
by analyzing what features have been consistently
present or traded-off in the way choices were
rank-ordered.
• Output of model is a set of numerical values
associated with every feature and feature level,
which portrays the relative importance of each to
the individual.

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