Lecture 4

Question 1

Conjoint Analysis

• Purpose
• Can Help To

Answer 1

One of the most used market research methods

Purpose: Estimate the importance of a specific product feature (Wi)

Can Help To:

• Decide whether to incorporate/improve a specific feature
• Estimate products’ market shares
• Estimate product demand

Question 2

Rating-Based Conjoint Analysis

Answer 2

Idea: Ask respondents to rate their valuation (V) of products with different levels of attributes (Ai)
-Uses linear regression to estimate the weight of each attribute (Wi)

Question 3

Rating-Based Conjoint Analysis Pros and Cons

Answer 3

Pros:
a. Corresponding to consumer choice theory
b. Straightforward to implement
Cons:
a. Hard for respondents to rate alternatives in a consistent way
-Solution: choice-based conjoint analysis
b. Too many alternatives (when # attributes increases)
-Solution: adaptive design for choice-based conjoint
c. Do not have incentive to think carefully
-Solution: incentive-alignment for choice-based conjoint

Question 4

Choice-Based Conjoint Analysis

Answer 4

Each respondent will be asked a set of the questions

• choosing from 2-4 product alternatives, with different combination of attributes
• answers help us estimate the weight of each attribute

Question 5

Importances Report

Answer 5

Importance value of screen:

                         Wscreen ---------------------------------------------------------- Wscreen + Wstorage + WfaceID + Wprice

Question 6

More Choice-Based Conjoint Analysis

Answer 6

Decide whether to incorporate/improve a specific feature
-Consumer’s willingness-to-pay for an improvement in attribute i:
(THIS IS CALLED “PARTWORTH”)

WTPi: Wi (*) change in price level
—————————-
Wp

When an attribute changes to something else, how much more or less is a consumer willing to pay

Question 7

Estimating Product Market Share

Answer 7

• Different consumers can have different values of Wi (they assign different weight to each attribute) –> They have different favorite product
• Demand share of a product = proportion of consumers that have it as the most preferred product
• In practice, the software estimates the distribution of Wi, and then calculate proportion of consumers who choose the product = the product’s market share

Question 8

Product Market Share (Vs.) Product Demand

Answer 8

Market Share does not equal Product Demand

Product Market Share:
 # of consumers who buy A / # of consumers who buy a product in the category (that A belongs to)

Product Demand: 
# consumers who buy A/ (consumers who buy in the category + consumers who do not buy)

**To estimate product demand, we need to know how many consumers’ won’t buy (None Option) **

Question 9

Incentive-Aligned Choice-Based Conjoint

Answer 9

Respondents’ choices will have a consequence, so that respondents are motivated to choose carefully.

Results from incentive-aligned choice-based conjoint have better prediction power that hypothetical ones.

Implementation: Refer to Slides

Question 10

Adaptive Choice-Based Conjoint

Answer 10

When the number of attributes increases, there will be huge number of combinations (a combination = a possible product)

Respondents have limited attention so we can optimally choose the product sets in each question to make the estimation more efficient & more accurate
-Choosing the next, question adaptively
(Questions on Sawtooth are chosen adaptively)