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Conjoint Analysis is simply "trade-off" analysis. It is a disciplined way to isolate what it is that a customer really wants to buy, and that knowledge allows the organisation to 'engineer' prime buying triggers into the product and prune out unnecessary features and other costs.
Conjoint Analysis is a statistical technique systematically varying customers' preferences among real and hypothetical configurations, to see what attributes are more important than others.
Used to identify actual physical differences rather than perceptual ones, Conjoint Analysis helps identify and prioritise determinant attributes to deliver better products and improve marketing mix decision making. (What price? What channel/s? What advertising & promotion? What brand personality? What product characteristics?)
Conjoint Analysis determines what factors target audience members will trade off or give up for other factors that make up the total product formed by the marketing mix. For example, Conjoint Analysis for one client discovered that customers simply did not find any value in a layer of packaging when they acquired a new product. This allowed the client to remove that layer and generate a 12.5% reduction in COGS!
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Marketing managers are faced with numerous difficult tasks directed at assessing future profitability, sales, and market share for new product entries or modifications of existing products or marketing strategies. These specific tasks include:
Each of the identified management problems may be addressed and solved using the conjoint analysis methodology. In addition, a conjoint based competitive strategy may be implemented by modifying the marketing mix, i.e., new product/concept identification, pricing, advertising and distribution. This competitive strategy may focus on new segments or product re-positioning.
In addition to product and corporate strategy, conjoint research has been applied to family decision making; Tourism, tax analysis; time management; direct foreign; and medicine.
Conjoint analysis involves the measurement of psychological judgments (such as consumer preferences, or accept-abilities) or perceived similarities or differences between choice alternatives.
The name "Conjoint analysis" implies the study of the joint effects. In marketing applications, we study the joint effects of multiple product attributes on product choice.
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