# Small Sample Quantitative Methods Conjoint Analysis

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```					Small Sample Quantitative Methods
Conjoint Analysis

COMM 3710
April 17, 2003
Tim Larson
Quantitative Techniques
Two choices when it comes to conducting quantitative
research…

•Collect less information across more
individuals =large sample technique

•Collect a lot of information from a few
individual =small sample technique

Rule of Thumb
individual, the fewer the number of cases you will need in
order to achieve a stable sample estimate.
Conjoint Analysis
• A small sample technique that quantifies people’s
preferences or priorities when faced with the task of
evaluating a set of products and choosing the most
preferred alternative.

• Parallels a realistic purchase situation

– What features or benefits is a consumer willing to trade off?

• For instance, if you were going to purchase a computer,
•HD memory •Monitor Size •RAM •OS
•Service •Software •Peripherals •Price
Basics of Conjoint Analysis
http://www.surveysite.com/newsite/docs/conjoint.htm

•In real purchase situations, consumers do not make choices based
on a single attribute like comfort or cost.

•Consumers examine a range of features or attributes and then
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.

•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?
Which would you choose? ___________

•Suppose you can take either a direct flight which takes three hours
or a flight that stops once and takes five hours.
Which would you choose? ____________
A Practical Example of Conjoint Analysis

•Seat comfort
•Price
•Duration of the flight

If we determine that these three attributes are the only
relevant attributes people use in choosing a flight, there are
potentially eight flight choices for a consumer to consider.

.
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

Which would you choose? ________
If not offered, which would you choose? ________
If not offered, which would you choose? ________
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 flight consumer

ATTRIBUTE              UTILITY         RANGE
Cost
\$400                 61              56
\$700                  5              (61 MINUS 5= 56)

Duration
3 hours              42              20
5 hours              22              (42MINUS 22=20)

Comfort seat          15               3
extra-wide           12              (15 MINUS 12= 3)
regular
Assignment 4.3
Using the Parts-Worth values in Exhibit 4.1, answer
the following questions:

1. What is the most important feature (variable) in the
purchase decision for this one individual and what
is the preferred class of that feature?
2. What feature is next in importance and what is
the preferred class of that feature? •
3. What are two features that have less impact on
preference?
4.1 Hypothetical Conjoint Output for FAX Machine

Utility    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 speed
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%
See Exhibit 4.1 Hypothetical Conjoint
Output for FAX

1. 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.
2. Print speed is next in importance, and the
highest speed of 10ppm speed is the most
preferred speed point.
3. Color and brand name have less impact on
preference because the utilities are much lower
for these features
(Block & Block)
4.2 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
Assignment 4.3
Using the Partsworth Diagrams in Exhibit 4.2, answer
the following questions:

1. A change in price from \$499 to \$699 greatly
(increases) or (reduces) preference?
2. The “elasticity” of the color feature is
(small/flat) or (great/steep)?
3. Which feature has the greatest elasticity?
(Block & Block)
See Exhibits 4.2 & 4.3

1. A change in price from \$499 to \$699 greatly
reduces preference, and with a price point of
\$899, preference dips even lower.
2. The “elasticity” curve for the color feature is
flat and highly elastic while the “elasticity”
curve for the price feature is steep and inelastic.
3. Color and Brand have the greatest elasticity,
but the least overall preference (utility or
partworth). Their “elasticity” curves are flat.
•The difference between highest and lowest
utility (partworth) is an indication of the impact
of a feature on overall preference.
(Block & Block)
4.3 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
1. Trade-Off or Two Factor Approach
– Two alternatives presented
• Rating Scales
2. 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.
3. Full-profile conjoint analysis
“Two -Factor Approach”
Paired Comparisons
See Exhibit 4.4 Trade-Off Conjoint Matrices

– Respondents are presented with a series of
combinations based only on pairs of features
– Requires respondent to make choices between pairs
about every combination of features and class 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
8ppm
8ppm                              10ppm

10ppm
Price
Telephone    \$499           \$699              \$899

With
Handset
Without
Handset
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
2. CHOICE SIMULATIONS USING A COMPUTER

Reveals consumer preference for specific product configurations.

Flight 1:   \$300          5 hours        two stops     no meal
Flight 2:   \$400          4 hours        one stop      snack
Flight 3:   \$500          3 hours        direct        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?
3. Full Profile Conjoint Analysis or
“Multi Factor Approach”
See Exhibit 4.5 - Product Descriptions in a
full profile conjoint analysis

•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
Data Collection (Choice #10 on previous slide)
Data collection involves showing respondents a series of cards that
contain a written description of each and every product configuration.

•A typical card examining the business traveler might be…

“When you next purchase a FAX machine, how likely would you be to
choose one with the following characteristics? Please circle
the appropriate number from 1 to 10 to indicate your feelings.”
•8PPM
•No Handset
•\$499

Would never                             Would definitely
choose this FAX                         choose this FAX
1     2   3      4    5    6    7    8   9     10
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.
Conjoint Analysis Demonstration

http://www.surveysite.com/newsite/docs/conjoint-example.html

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