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Conjoint analysis is often lauded as an extremely effective way to gain detailed insights and conduct market research, but how does it work?

Essentially, conjoint analysis is a method of measuring the value that customers place on different features of an existing or new product. It typically works via a survey, which looks something like this:

Participants are shown a combination of features (called attributes) for a product. If the product is a smartphone, for example, they might be shown the price, memory size, screen resolution, and camera quality. They’re then asked to compare different attributes. For example, what would they choose between a $150 phone and a $250 phone? Do they prefer 32GB of memory or 64GB? There are several ways to structure this, as we’ll find out. After the answers have been collected, we analyze the results to inform the right marketing decisions.

Conjoint analysis is a powerful market research method used to analyze and understand customer preferences. It is particularly valuable in assessing product attributes and their impact on consumer decision-making. In this blog post, we’ll delve deeper into the different types of conjoint analysis and the various benefits it can deliver.

Why Do Conjoint Analysis?

By examining various factors such as product features, price, brand, and packaging, conjoint analysis provides insights into how different attributes influence the target audience’s choices. This market research method proves especially beneficial in different stages of the product life cycle, from initial business analysis and product design to the product launch and beyond.

Conjoint analysis aids great product managers, designers, and project managers in making informed decisions by identifying the optimal combination of features and attributes that resonate with the target audience. It leverages research techniques like mail surveys, personal interviews, focus groups, and telephone surveys conducted by skilled survey researchers to gather data on consumer preferences and opinions. This valuable information helps development teams refine and optimize the final product, ensuring it meets customer needs and expectations.

Additionally, conjoint analysis provides insights into the competitiveness of existing products and aids in strategic planning for future product enhancements or new offerings.

Reasons to Conduct Conjoint Analysis

There are several reasons to conduct a conjoint analysis, including:

  • To measure and understand customer preferences for certain product features.
  • To assess or predict how well a new product will do if brought to market.
  • To gain an understanding of how changes in price affect demand.
  • To predict future trends, for example, around the adoption of certain features.

How to Conduct Conjoint Analysis

Choose the Right Survey Type

The first stage is to decide on the correct survey type. There are several ways to do a conjoint analysis — here are the main methods:

  1. Ratings-based conjoint analysis: This is where participants give each attribute a rating, for example, on a scale of 1-100.
  2. Ranking-based conjoint analysis: This is where participants rank the attributes in order from best to worst. There is also a best vs. worst analysis, where participants simply pick their favorite and least favorite attributes from the selection.
  3. Choice-based conjoint analysis (CBC): This is the most commonly used model and the one this guide will focus on. It presents combinations of attributes to participants and asks them to choose which they prefer.

One of the most powerful advantages of choice-based conjoint analysis is that it can allow you to use modeling to predict how customers will feel about combinations they didn’t even assess. In other words, it is an extremely efficient way of predicting responses to features without having to spend a huge amount of time testing each combination.

Identify the Relevant Attributes (Features)

Next, it’s time to decide which product attributes you want to have your respondents compare and assess. The key is not to use too many. We typically avoid using more than 5 or 6 attributes, e.g., for a car: color, engine size. We do this to reduce respondents’ cognitive load to ensure they engage with the choices presented to them.

For each attribute, you need to add levels. For example, if your participants are assessing a smartphone, one attribute might be ‘price,’ and the levels might be $200, $350, and $700.

The levels will usually reflect the different tiers of the product you’re considering selling. For the smartphone, you might be releasing a basic model, a higher-end model, and a deluxe model. The levels for attributes such as price, camera size, and memory will align with those tiers.

Levels should be chosen based on factors like:

  • How interesting and valuable they are for management — will they inform useful decisions?
  • How well they avoid bias?
  • How realistic they are.

In the CBC method, there are two commonly used models for making choices:

  • Single choice with none: This requires the participant to make one choice out of the selection. There is also the possibility to select none of the options.
  • Single choice: This is the same as above, but there is no ‘none’ option — the participant has to pick one.

Design the Questionnaire

Screener Questions

Most surveys start with some screener questions. These are general questions around demographics like the respondent’s age, job title, or purchase habits. The goal is to filter out those who won’t be a good fit for the survey based on the people you’re trying to target.

Introduce and Explain

It’s important to take some time at the beginning of the survey and in your questions to clearly explain what the respondents need to do to answer the questions. Surveys should be as clear and easy to follow as possible.

Create the Right Questions

The questions you choose and how you structure them will make or break your survey. Here are some guidelines to follow:

  • Questions should follow one another logically and be grouped together intuitively. It’s best not to confuse your participants by ordering your questions in a confusing way.
  • People often give more accurate and useful answers when you use situational questions. For example, instead of asking, “Which phone would you buy?” ask something like, “Thinking back to the last time you purchased a phone — if you had the following options instead, which would you have picked?”
  • Finish with some demographic questions so that you can further understand your customer base and analyze the results by demographic to understand any meaningful differences.

Analyze and Take Action

Once the survey has been written, scripted, sent out, and completed by your target group, it’s time to analyze the results and take action on them. This is perhaps the most important part of the process, as it’s where your research can really make a tangible impact.

There are several ways to analyze your results based on how you designed the survey. The most important thing is to collect and analyze your data in a way that makes it easy to draw useful conclusions and share them.

This will allow you to gain real value from the survey and present those findings to others in the company. This:

  • Helps justify your decisions and actions.
  • Informs future plans and inspires new features.
  • Identifies areas that need to change or improve.

At Kadence, it’s our job to ensure you create and conduct the most effective surveys and market research possible, giving your brand the edge. To find out more about how we can help with conjoint analysis and more, get in touch to request a proposal.

Conclusion

Conjoint analysis is a valuable tool in understanding consumer preferences and making informed product development decisions. By carefully designing and executing your surveys, you can gain insights that drive strategic planning and optimize your products to meet market demands. Whether you’re evaluating new product features, pricing strategies, or competitive positioning, conjoint analysis can provide the detailed insights needed to succeed in today’s competitive market landscape.

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At Kadence, our global footprint and cultural diversity mean we often celebrate significant cultural festivities. This year, we celebrated Chinese New Year by sharing our New Year’s resolutions with one another – celebrating everyone’s positivity for the year ahead.  

Chinese New Year is the equivalent of Christmas in the West, the 15 day long holiday opens up a wealth of opportunities for brands. According to China’s Ministry of Commerce, Chinese consumers spent $149 billion across the holiday in 2019. This is the time of the year when spending and travelling peak on a phenomenal scale. This blog post explores the trends around spending and travelling, and what this means for brands.

GIVING MONEY & GIFTING IS BIG BUSINESS

We know from our extensive work in China that gifting is a big part of the country’s culture – the extent of this was brought to life on a project where we interviewed High Net Worth Individuals (HNWIs) in China who buy luxury mobile phones as presents for business partners.

At Chinese New Year, gift-giving turns into cash-giving. Money is traditionally given in red envelopes to friends and relatives as a gesture of good fortune. Over the past few years, the Chinese are sending red envelopes as digital cash gifts via China’s top messaging app, WeChat. The app has 400 million users, evolving from a basic chat app like WhatsApp into a platform that includes e-commerce, taxi-hailing, payments and more.

Traditionally, one would only give red envelopes in person, but technology has made it possible to send money to just about anybody. Last year, over 14 billion ‘red envelopes’ were shared between WeChat users on New Year’s Eve alone. The chart below from Statistica shows the dramatic increase in exchanging digital red envelopes on WeChat over the past few years.

WHAT DOES THIS MEAN FOR BRANDS?

If consumers are sending money digitally on WeChat, could gifts be sent digitally too? Starbucks China has since tapped into this behavior, where one can buy a friend a coffee which can be redeemed at any Starbucks store. WeChat’s existing infrastructure and vast user base offer a platform for brands to extend their offering from in-store and online to social media. Who wouldn’t want a McDonald’s or even a luxury candle from a friend 750 miles away?

BIGGEST ANNUAL MIGRATION OF HUMANS

Chinese New Year is the biggest annual human migration in the world, with 2.5 billion trips made each festive period. This includes workers seeking employment in large affluent cities or university students returning to their rural hometowns to visit relatives.

We have seen this first hand from conducting a study with Didi (a Chinese Uber equivalent) drivers for a major fuel and energy provider. Didi drivers save up holidays and money to travel home in order to spend quality time with their families, after a year’s hard work.

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WHAT DOES THIS MEAN FOR BRANDS?

The vast distance and traveler volume associated with this phenomenon present some interesting opportunities for brands, and not just in the state-funded transportation industry.

The average individual journey taken at Chinese New Year is 255 miles, which makes us wonder how consumers spend all that time? Can entertainment or gaming brands tap into this ‘lost time’? What are the implications of all this screen time for advertisers, for example, adverts on China’s biggest streaming platform Tencent Video. 

Or how can convenience food, snack, or drink brands capture share of wallet on these long journeys? Perhaps a new variant of existing products to fuel on-the-go consumption would fill the gap?

A WORLD OF OPPORTUNITIES

One of the most interesting aspects of conducting research in China is bringing the cultural nuances to life for our clients. We like to immerse ourselves in the world of the end consumers by being there in person. Whether it’s discussing career goals with accountants or exploring the luxury needs of HNWIs – we believe conducting the qualitative explorations ourselves yields the greatest insight.

We’ve had some wonderful opportunities to solve and advise global clients on business issues, from tackling regional differences to evaluating potential Chinese brands as a joint-venture partner. This market continues to surprise us on a daily basis. There is so much we are yet to explore as global brands tap into the world’s fasting growing economy.

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About Amy

Amy has worked at Kadence for over five years having previously worked in Millward Brown Taiwan. Born and raised in Taiwan, Amy is bilingual in Mandarin and English. Amy sits in our London office, often travelling to China to explore the market on the ground.

Her language and insight skills make her the perfect candidate to broach the gap between UK clients and Chinese consumers (or vice versa). Effortlessly interpreting Chinese consumer voices and turning them into to actionable insights for UK clients.