What is Conjoint Analysis?


Conjoint analysis is a popular method of product and pricing research that uncovers consumers’ preferences and uses that information to help select product features, assess sensitivity to price, forecast market shares, and predict adoption of new products or services.

Conjoint analysis is frequently used across different industries for all types of products, such as consumer goods, electrical goods, life insurance plans, retirement housing, luxury goods, and air travel. It is applicable in various instances that centre around discovering what type of product consumers are likely to buy and what consumers value the most (and least) about a product. As such, it is commonplace in marketing, advertising, and product management.

Businesses of all sizes can benefit from conjoint analysis, including even local grocery stores and restaurants — and its scope is not just limited to profit motives, for example, charities can use conjoint analysis’ techniques to find out donor preferences.

How does conjoint analysis work?

Conjoint analysis works by breaking a product or service down into its components (referred to as attributes and levels) and then testing different combinations of these components to identify consumer preferences. For example, consider a conjoint study on smartphones. The smartphone is sorted into four attributes which are further broken down into different variations to create levels:

Example of attributes and levels in a conjoint exercise

Here’s how the combination of these attributes and levels may appear as options to a respondent in a conjoint choice task:

Example conjoint choice task

Going further than simply asking respondents what they like in a product, or what features they find most important, conjoint analysis employs a more realistic approach: asking each respondent to choose between potential product concepts (or alternatives) formed through the combination of attributes and levels. These combinations are carefully assembled into choice sets (or questions). Each respondent is usually presented with 8 to 12 questions. The process of assembling attributes and levels into product concepts and then into choice sets is called experimental design and requires extensive statistical and mathematical analysis (done automatically by Conjoint.ly or manually by researchers).

Using survey results, it is possible to calculate a numerical value that measures how much each attribute and level influenced the respondent’s choices. Each of these values is called a “preference score” (AKA “partworth utility” or “utility score”). The below example shows preference scores for attributes and levels of a mobile phone plan.

Preference scores are calculated for each attribute and level

Preference scores are used to build simulators that forecast market shares for a set of different products offered to the market. By using the simulator to model (i.e. simulate) respondents’ decisions, we can identify the specific features and pricing that balance value to the customer with cost to the company and forecast potential demand in a competitive market situation. The below example shows how different data amounts in a mobile plan will affect a company’s market share.

Simulating market shares across different product scenarios

Why do conjoint analysis with Conjoint.ly?

Conjoint.ly automates the often complicated experimental design process using state-of-the-art methodology. This gives you control over specific settings, such as the number of concepts per choice set and the number of choice sets per respondent when you set up a conjoint analysis experiment. Respondents then complete the choice tasks within the conjoint survey – this typically requires a few hundred responses but may vary depending on the complexity of the study.

Once we’ve gathered the recommended sample size of respondents, our tool produces a survey report which contains several in-depth outputs. The outputs of Brand Specific Conjoint, Generic Conjoint, and Brand-Price Trade-Off include estimates of respondents’ preferences, overall sample profile, segmentation and interactive simulations. Conjoint.ly estimates and charts preference shares, revenue projections, and price elasticity using simulators.

There are many types/flavours of conjoint analysis, classified by response type, questioning approach, and design format. All flavours of conjoint analysis have the same basics but not all are as effective as others. That’s why Conjoint.ly offers two key conjoint designs, called generic and brand-specific, and uses the most tested, developed, and theoretically sound response type – choice-based conjoint analysis (CBC). CBC’s predictive power far surpasses its alternatives, such as SIMALTO and self-explicated conjoint, making it the ideal choice for your next experiment.

Don’t have a large marketing budget or the scope to conduct conjoint analysis? That’s OK: Conjoint.ly does full conjoint analysis for you, affordably. Unlike desktop software tools, Conjoint.ly does not require you to deep dive into the advanced methodology of conjoint analysis. Your business can rely on the full functionality of our software to deliver high-quality analysis and powerfully accurate results. We embody an agile approach that puts you in control of the research process without the need.

Conjoint.ly is made unique by the following characterstics:

  • We are the home of conjoint analysis. Conjoint.ly offers complete set of outputs and features through an accessible interface.

  • Quick to set up. Setting up your experiment is fast and hassle-free with our simple wizard, which helps you choose appropriate settings and suggests your minimum sample size. You won’t need to customise or test any survey – our system does that for you. Conjoint.ly can send participants invites on your behalf or generate a shareable link for you.

  • Easy on respondents. Experiment participants only need a few minutes to complete a survey and can answer questions with ease on their mobile phone, tablet, or computer.

  • Smart analytics done for you. Behind the scenes, Conjoint.ly uses state-of-the-art analytics to crunch the numbers, and check validity of reporting. Outputs are ready for any application of conjoint analysis (pricing, feature selection, product testing, new market entry, cannibalisation analysis, etc.) in any industry (telecommunications, SaaS, FMCG, automotive, financial services, HR, etc.).

  • Our support team is ready to help with you with your studies if you need any assistance.

Outputs

Consider you are launching a new product and wish to address several research questions. Through the below example, we demonstrate how various outputs from your Conjoint.ly survey report can be used to gain insights.

  1. To assess relative importance of attributes (attribute preference scores/utilties). You can identify the most important attribute consumers look for when considering your product or service.

    Consumer preferences displayed through attribute preference scores


  2. To assess relative value by level (level preference scores/utilities). Consumer preferences are further broken down, displaying scores for each individual level.

    Consumer preferences displayed through level preference scores


  3. To evaluate adoption potential. You can simulate new product launches (NPDs) to see redistribution of preference and revenue shares.

    Simulation of baseline for preference shares for Ladina Klubnia


  4. To test the impact of new features. Preference shares and revenue projections (assuming 1,000 units offered) can is simulated to assist in adding or modifying product features. In the below scenario a baseline for four car brands is being shown for preference shares and revenue projections.

    Ladina Klubnia preference shares simulation of Automatic versus Manual



  1. To find optimal pricing. Price elasticity of demand can be calculated for multiple scenarios by clicking on two points of a preference share simulation. In this scenario, when clicking on both the $23,000 and $25,000 price points for Ladina Klubnika a message will be displayed stating that the price elasticity of demand is elastic.

    Simulation of price elasticity preference shares for Ladina Klubnia


  2. To profile your potential customers. If you want to explore the characteristics of those most likely to purchase your product, you can enable segmentation based on preferences for concepts in a particular scenario.

    Respondents most inclined to buy Ladina Klubnika with automatic transmission


History of conjoint analysis

Conjoint analysis has its roots in academic research from the 1960s and has been used commercially since the 1970s. In 1964, two mathematicians, Duncan Luce and John Tukey published a rather indigestible (by modern standards) article called Simultaneous conjoint measurement: A new type of fundamental measurement. In abstract terms, they sketched the idea of “measuring the intrinsic goodness of certain characteristics of objects by measuring the goodness of an object as a whole”.

The article did not mention data collection, products, features, prices, or other elements that we associate with conjoint analysis today, but it spurred academic interest in the topic and perhaps gave rise to the name “conjoint”. It not only kick-started the topic but also set the tone for future developments in the area. Over time, it has become technical to the point of inaccessibility to most people, led by American academics with a strong emphasis on the statistical workings of survey research.

Green and Srinivasin (1978) agree that the theory of conjoint measurement was developed in Luce and Tukey’s paper but that “the first detailed, consumer-orientated” approach was Green and Rao’s (1971) Conjoint Measurement for Quantifying Judgmental Data. In 1974, Professor Paul E. Green penned On the Design of Choice Experiments Involving Multifactor Alternatives, cementing the impact of conjoint analysis in market research.

Over the next few decades, conjoint analysis became an increasingly popular method across the globe with notable studies in the 1980s and 90s highlighting its growing adoption and development during this time (Wittink & Cattin 1989; Wittink, Vriens, and Burhenne 1994 cited in Green, Kreiger & Wind 2001).

Conjoint surveys are continuously developing on a range of software platforms, through which many different flavours of conjoint analysis can be enjoyed. Today, conjoint analysis thrives as a widespread tool built on a robust methodology and is used by market researchers daily as an indispensable tool for understanding consumer trade-offs.

A simple conjoint analysis example in Excel

To further your understanding, you can download our conjoint analysis example in Excel, also available on Google Sheets (which you can copy to edit). This example covers:

  1. Inputs for a conjoint study
  2. Questions presented to respondents
  3. Calculations of preference scores (relative preferences and importance scores of attributes)

This example is limited to:

If you’d like to experience a real online conjoint analysis software tool, sign up to view our example reports and or to create a conjoint survey.

FAQs

Frequently Asked Questions(FAQ)

Who invented conjoint analysis?

Mathematicians Duncan Luce and John Tukey published the first source on conjoint in 1964, called Simultaneous conjoint measurement: A new type of fundamental measurement. However, it is generally agreed that Paul E. Green and Vithala R. Rao’s 1971 paper, Conjoint Measurement for Quantifying Judgmental Data is “the first detailed, consumer-orientated” approach to the topic. See History of conjoint analysis.

Is conjoint analysis qualitative or quantitative?

Conjoint analysis is a form of quantitative research. Respondents are asked to complete surveys with a number of product concepts which are presented in choice sets.

Why is conjoint analysis used?

Market research helps pre-test products before launch as it is costly to release products into market without testing because of high risk of failure. Whereas non-conjoint research methods are not well-suited for taking into account key market factors (demand and competition),conjoint surveys are use a more realistic methodology which is closer to an actual buying situation.

What is choice-based analysis?

Choice-based analysis (AKA discrete choice experimentation) is a type of response used in conjoint studies where respondents are tasked with choosing which option they would buy. It is considered the most reliable method of choosing responses as it is the most realistic in a market research context.

What is adaptive conjoint analysis?

Unlike standard conjoint, in adaptive conjoint studies questions are not pre-determined and instead the survey ‘adapts’ to respondents’ choices to create each question. It is suitable for studies where there are a large number of attributes that otherwise would not fit functionally in a standard conjoint exercise.

What is discrete choice analysis?

Discrete choice analysis is examination of datasets that contain choices made by people from among several alternatives. Commonly, we want to understand what drove people to make these choices. For example, how does weather affect people’s choice of eating out, ordering food delivery, or cooking at home. Choice-based conjoint is another example of discrete choice analysis.

What is the difference between conjoint and discrete choice experiments?

Conjoint analysis is a survey-based technique of presenting respondents with several options (each described in terms of feature and price levels) and measuring their response to these options. When the measured response is their choice between these options (rather than ranking or rating each of these options), it is called choice-based conjoint (which is the most commonly-used type of discrete choice experiments).

What are the steps in conjoint analysis?

  1. Recognise the business problem.
  2. Create research questions.
  3. Choose survey methodology.
  4. Collect data.
  5. Clean data.
  6. Analyse data.
  7. Prepare presentation.
  8. Determine business action.

What is a partworth?

A partworth (AKA partworth utility or preference score) is a numerical score that measures how much each product feature influences the respondent’s selection of a particular concept. You can learn more about them here.

What are partworth utilities and conjoint simulations used for?

Partworth utilities (AKA preference scores) are useful in describing average preferences for your customers (or sub-groups). For example, you can find that your customers in general prefer a particular colour, flavour or price (vs. another colour/flavour/price). Partworth utilities are the key output of Generic Conjoint because they help with feature selection. Conjoint preference share simulations are useful in showing that percentage of people will choose a particular colour/flavour/price given the choice of other products with different colour/flavour/price. Simulations are the key output of Brand-Specific Conjoint and Brand-Price Trade-Off because they help in predicting adoption, revenue, price elasticity, and cannibalisation.

Can you do segmentation and cluster analysis on conjoint data?

Yes, if you use modern techniques of analysis, such as Hierarchical Bayes (default in Conjoint.ly), you get individual-level preference scores (model coefficients). These scores can be used in clustering responses and investigating segments of buyers.

For more content on conjoint analysis, you can read additional guides our About Conjoint Analysis series:

To play with example reports and set up your own conjoint experiments, you are invited to sign up for no cost today.