Conjoint analysis is a market research tool that is used to understand what consumers think of various features of a product or service.
By asking respondents to select their choice from different combinations of attributes (such as brand, price, or features), it’s possible to determine the relative importance of each feature statistically.
How Does Conjoint Analysis Work?
Conjoint analysis works by deconstructing a product or service into its basic elements and presenting varying combinations of these elements to the customers to understand what they like. The process is analogous to the way people make decisions in the real world, as all decisions carry a trade-off.
Breaking Down a Product
First, a product would be broken down into its key attributes. For a smartphone, these may be screen size, brand, battery life, and price. Then, each attribute is given various “levels.” For example, the attribute “price” may have levels such as $799, $999, and $1199.
Creating Survey Scenarios
Next, researchers develop a conjoint analysis survey in which different combinations of these attributes are presented to potential customers in the form of separate product profiles. Instead of asking “How important is battery life?”, the survey asks survey attendees to choose between complete product concepts.
Gathering Choices
Respondents are asked to select their most preferred product from the scenarios given. This makes them make trade-offs, as they would in an actual store. For example, they may have to choose between a phone with a better camera but a higher cost, or a phone with a longer battery life but a smaller screen.
Analyzing the Data
Statistical analysis is then used to calculate “part-worth utility” for each of the attribute levels. This value is used to represent the level of contribution of each feature in the general preference of the consumer. This analysis helps to understand which features are more valuable and which are less critical.
Why Is Conjoint Analysis a Game-Changer for Your Business?
For decision-makers, VCs, and startups, knowing what customers truly want is the key to minimizing risk and maximizing ROI. Conjoint studies present a data-driven basis for making strategic decisions.
- Optimize Product Development: It can help you prioritize which features to invest resources in to make sure that you are allocating your resources to what will truly drive customer satisfaction and purchase intention.
- More Innovative Pricing Strategies: A pricing conjoint analysis is a potent tool for determining optimal pricing points. It brings out the sensitivity level of the customers to price changes as well as what they will pay for specific features.
- Gain a Competitive Edge: By simulating competitive scenarios, you can find your strengths and weaknesses compared to your competitors and find unique ways to distinguish your offering [[LINK:index:url:text]].
- Effective Market Segmentation: Conjoint analysis assists in identifying different customer segments with varying preferences and enabling more targeted and personalized marketing campaigns.
Major Types of Conjoint Analysis
There are multiple ways of conducting conjoint analysis, which are appropriate for different research objectives. The two most prevalent ones are Choice-Based Conjoint (CBC) and Adaptive Conjoint Analysis (ACA).
For businesses interested in conducting conjoint studies, it is essential to know these differences. A research partner such as Nexus Expert Research could help you decide on which research method is the most perfect for your needs.
| Type of Analysis | Description | Best For |
| Choice-Based Conjoint (CBC) | Respondents are shown several product profiles and asked to choose the one they would most likely buy .This is the most popular and widely used method . | Pricing research, product packaging, and market share prediction . |
| Adaptive Conjoint Analysis (ACA) | The survey adapts based on the respondent’s answers, creating a customized experience to efficiently narrow down preferences . | Situations with a large number of product features to evaluate, product design, and segmentation research . |
Real-World Example of a Conjoint Analysis Survey
Suppose the scenario is where a company would like to launch a new laptop. Instead of waging a hunch about which features are essential and which are not, they can resort to a conjoint analysis survey. Respondents would be faced with choices such as the following.
| Feature | Laptop A | Laptop B |
| Screen Size | 13 inches | 15 inches |
| Battery Life | 8 Hours | 12 Hours |
| Price | $1,200 | $1,500 |
By analyzing thousands of answers to different combinations, the company can be exact in quantifying how much more money customers are willing to pay for a 15-inch screen or an additional 4 hours of battery life.
Unlocking The Growth with Expert Insights
Conjoint must be conducted with proper design and advanced statistical analyses to be effective. For businesses trying to design products that resonate with the market and cost in terms of success, it’s essential that they use expert analysis.
Nexus Expert Research is an expert in translating hard-to-understand consumer data into easy-to-act strategies.
Conclusion: Make Decisions with Confidence
In the current competitive world, guesswork is no longer a luxury that businesses can afford. Conjoint analysis is a dependable, quantitative way to make sure you understand the trade-offs your customers are making, and that your product development, pricing, and marketing strategies are focused on what people actually value.
Ready to decode your customers’ needs and launch products that fly off the shelves?
Contact Nexus Expert Research today for a free consultation and discover what drives your customers’ choices.
