Case Study
February 12, 2025
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What is the Responsibility of Business in These Troubled Times? It wouldn’t be an understatement to say that we are living in Dark Times and where the discourse and the narrative are dominated by hate and vitriol. Moreover, there is an unprecedented assault on the marginalised and the underprivileged, what with stripping them off their […]
CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become ‘customer emphatic’ rather that ‘product emphatic’. Birth of CRM was because of this heedful perceptiveness. The famous writer and management consultant Peter Drucker wrote; ‘The true business of every company is to make and keep customers’. […]
During the sixties, when researchers tried to understand consumers’ decision making process, they used a simple questionnaire or a form.
Respondents would generally answer what was on the top of their minds or what they assumed the researcher wanted to hear. However, this did not always correspond to their actual purchase decisions.
For example, consider a questionnaire designed to understand consumers’ perceptions of the most desirable smart phone features.
On a scale of 1 – 10 where 1 is least important and 10 is most important, rate:
The survey data would usually reveal that all features are extremely important and the user would want all the features at the lowest cost. Such a discovery is not actionable and hence not usable.
Users cannot have more of all features that are attractive and less of all features that are not desirable. Instead, they must compromise of few characteristics to get more of the others. This method wherein various characteristics are considered jointly to make a purchase is known as conjoint analysis. It enables market researches to anticipate purchases with more certainty.
Conjoint analysis is also popularly called trade off analysis as buyers have to let go of certain product features that they consider lucrative to make a more practical purchase. For example a large number of people planning to buy a new smart phone might think that however much they want an iPhone 6, they will have to be content with a less expensive phone.
Thus we see that consumers are put in a situation where they are forced to evaluate the merit of the phone attributes such as configuration, OS, price, brand, etc. Thus, broadly conjoint analysis checks the compromises users make while selecting products or services.
The process of conjoint analysis is described in a simplified manner in the following steps:
For certain kind of products, consumers do their evaluation built on intangible attributes or image. These products mostly comprise of luxury items where the emotional factor rather than the rational side dominates. In cases like these, the logic of conjoint analysis does not apply.
With an exception to this situation, conjoint is quite inexpensive as compared to other similar methods such as concept testing and hence is hugely popular.
In a nutshell, it is a versatile and powerful tool to predict consumer choices, foresee their purchase decisions and hence design and launch products accordingly.
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