Modeling Trade-Offs to Maximize Sales
Business is about trade-offs. If I charge X, I can’t offer Y. If I have this feature, I can’t have that feature. And the same is true of your customers. In making their purchase, they trade off the features that are most important to them against the price they are willing to pay, within the context of the competitive offerings available to them.
So, how do you know what trade-offs to make? Conjoint Analysis, a market research tool, helps you understand the trade-offs consumers make in their decision choices, so that you can make the product design, pricing and marketing decisions that optimize your business.
Conjoint analysis is a set of marketing research techniques that measures the value of each feature of your product for the customer, and predicts the value of any combination of features. With conjoint analysis, you can:
- Evaluate how respondents to make trade-offs among features
- Determine the relative value they place on each feature
- Simulate how the market reacts to changes in feature trade-offs (yours or your competitors)
Conjoint analysis results in a market simulator that can be used to answer many different business questions. How valuable are the features of my product? If my competitor introduces a product with these features, how will that impact my market share? If I change a feature, will I need to lower the price and how will that impact my market share? What is the optimal product for me to introduce? The simulations are limited only by the product features you ask about in the survey, and can include price, distribution and brand.
Due to the types of questions asked, conjoint analysis is usually conducted with online surveys. Now, we can do conjoint analysis with telephone surveys! Check out our blog post for some conjoint analysis examples that you can use!
To find out if Conjoint Analysis is a solution for you, contact us today.