Small Sample Quantitative Methods Conjoint Analysis

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Small Sample Quantitative MethodsConjoint
Analysis

• COMM 3710
• November 21, 2002
• Tim Larson

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Small Sample Quantitative Techniques
Two choices when it comes to conducting
research -Collect a lot of information from a
few individuals -Collect less information
across more individuals. Rule of Thumb -The
more information you collect from any single
individual, the fewer the number of cases you
will need in order to achieve a stable sample
estimate. Conjoint analysis uses this rule of
thumb by measuring a phenomenon systematically in
every possible light hence, the statistical
stability without the large, expensive samples.
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Scales and Use of Sophisticated Analytical
Procedures

• If you can assume that the differences in the way
  people standardize their perceptions and the
  widths of the intervals will average themselves
  out --in other words, those who are more
  stringent balance out those who are less
  stringent-- then you can treat scales as though
  they were ratio scales and calculate averages
  using the more powerful analytical quantitative
  statistical procedures.
• For most marketing and B2B market research
  purposes, attitude scales are used as though they
  are ratio- and equal-interval scales.

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Conjoint Analysis(CA)

• A technique that quantifies peoples preferences
  or priorities when faced with the task of
  evaluating a set of products or services and
  choosing the most preferred alternative.
• Often labeled trade-off analysis
• Parallels a purchase situation
• Product purchase example
• Computer brands and descriptors
• HD memory
• monitor size
• RAM
• OS
• service
• software
• peripherals

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Conjoint Analysis

• Important first step in conjoint analysis is to
  determine the
• appropriate features to test for. (Qualitative
  research)
• Second step is to determine an appropriate number
  of
• realistic levels (attribute configurations) for
  each feature.

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Basics of Conjoint
Analysis http//www.surveysite.com/newsite/docs/co
njoint.htm
Suppose you wanted to book an airline flight and
you had a choice of spending 400 or 700 for a
ticket. Which would you choose? What if the
only consideration was sitting in a regular or
an extra-wide seat? Likely would choose the
extra-wide seat. Suppose you can take either a
direct flight which takes three hours or a flight
that stops once and takes five hours. Choice is
clear.
In real purchase situations, consumers do not
make choices based on a single attribute like
comfort or cost. Consumers examine a range of
features or attributes and them make judgments
or trade-offs to determine their final purchase
choice. Conjoint analysis examines the
trade-offs to determine the combination of
attributes that will be most satisfying to the
customer.
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A Practical Example of Conjoint
Analysis http//www.surveysite.com/newsite/docs/co
njoint-tutor.html
Conjoint analysis presents choice alternatives
between products/ services defined by sets of
attributes. For example Would you prefer
a flight with regular seats, that costs 400
and takes 5 hours, or a flight which costs
700, has extra-wide seats and takes 3
hours? If, for example, we see seat
comfort, price and duration are the only
relevant attributes, there are potentially eight
flight choices.
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Conjoint Analysis Airline Flight Example
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Utility or Part-worth
Utility is defined as a number which represents
the value or relative worth consumers place on
an attribute or part.. A low utility
indicates less value a high utility indicates
more value. Hypothetical utilities for an
individual consumer ATTRIBUTE UTILITY RANGE
Duration 3 hours 42 20 5
hours 22 (42MINUS 2220) Comfort seat 15
3 extra-wide 12 (15 MINUS 12 3)
regular Cost 400 61 56 700
5 (61 MINUS 5 56)
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CHOICE SIMULATIONS Using the
Computer Reveals consumer preference for
specific products defined by the researcher.
Flight 1 300 5 hours two stops meal
Flight 2 400 4 hours one stop snack
Flight 3 500 3 hours direct no
meal Possible Questions Will a price change
of 50 influence the consumers choice? Would
the consumer be willing to pay 50 more if s/he
got a meal?
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Data Collection Data collection involves
showing respondents a series of cards that
contain a written description of the product or
service. A typical card examining the business
traveler might look like the following
On your next business flight overseas, how
likely would you be to choose a flight
that has all the following characteristics?
Please circle the appropriate number from
1 to 10 to indicate your feelings. One stop
en route Extra-wide seats Departure time
before 800 AM Double mileage points 200
fee to change ticket Would never
Would definitely choose this
flight choose this flight 1 2 3
4 5 6 7 8 9 10
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FAX ExampleSee Exhibit 5.4 Hypothetical Conjoint
Output for FAX that follows.
Price is the most important feature in the
purchase decision for this one individual, and
the lowest price of 499 is the most preferred
price point. Print speed is next in importance,
and the highest speed of 10ppm speed is the most
preferred speed point. Color and brand name
have less impact on preference because the
utilities are much lower for these features
(Block Block)
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5.4 Hypothetical Conjoint Output for FAX Machine
Partsworth Difference
Relative Weight Paper cutter Yes .6 No
.01 .59 18
Telephone handset Yes .5 No .1 .4
12 Answering machine Yes .8 No .5
.3 9 Print speech 5ppm .3 8ppm .9
10ppm 1.0 .7
21 Brand name Sharp .4 Panasonic .5
Brother .5 HP .6 .2 6
Color Black .1 Putty/Beige .2 Gray .2 .1
6 Price 499
1.5 699 .9 899 .5 1.0
31 Total Utility
3.29 100
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FAX Example See Exhibits 5.5 5.6 that follow.

• Partsworth diagrams for hypothetical FAX example
• A change in price from 499 to 699 greatly
  reduces preference, and with a price point of
  899, preference dips considerably lower.
• Difference between highest and lowest utility is
  an indication of the impact of this feature on
  overall preference.
• Note that the elasticity of the color feature
  is small and flat while price elasticity is
  steep. (Block Block)

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5.5 Partworth Diagrams for Hypothetical FAX
Example
Preference Utility
Preference Utility
Preference Utility
Black Beige Gray Color
Yes No Paper Cutter
Yes No Answering Machine
Preference Utility
Preference Utility
Preference Utility
Sharp Panasonic Brother Hp Brand
Name
Yes No Telephone Handset
499 699 899
Price
Preference Utility
5ppm 8ppm 10ppm Print Speed
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Alternative Measurement Techniques in Conjoint
Analysis

• The paired comparison
• Two alternatives presented
• Rating Scales
• Added to paired comparison to get more data
• Conjoint simulation using a computer
• Lets you estimate the ideal feature combinations
• Computer-aided Interviewing
• Computer models used to present and compute
  conjoint analysis research.
• Full-profile conjoint analysis

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Trade-Off Conjoint Analysis orTwo -Factor
ApproachPaired ComparisonsSee Exhibit 5.8
Trade-Off Conjoint Matrices that follows.

• Respondents are presented with a series of
  combinations based only on pairs of features
• Requires respondent to make choices about every
  combination of features and levels.
• This intense data collection adds to the
  stability of the utilities for even small
  samples.
• Works best when features do not interact with one
  another, or in others words, the preference or
  utility of one variable compared to another does
  not depend on the circumstances of a third
  feature.
• Computer model analyzes the data to get utility
  values
• (Block Block)

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5.8 Trade-Off Conjoint Matrices
Telephone
Price
Price
These are merely examples of possible responses.
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Full Profile Conjoint Analysis or Multi Factor
ApproachSee Exhibit 5.9 - Product Descriptions
in a full profile conjoint analysis that
follows.
Respondents are presented with a complete
profile of alternative products, each alternative
profiled in terms of information for each and
every feature of interest. Rather than pairs
of features, in full profile CA the individual is
confronted with many alternatives for which s/he
must consider all the various features before
indicating a rank-ordered preference among them.
Using computers to model and crunch the data,
full-profile CA is the dominant method used
today. (Block Block)
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Product Description in a Full Profile Conjoint
Example

• Card Print Speed Handset Price
• 5ppm Yes 499
• 5ppm Yes 699
• 5ppm Yes 899
• 4 5ppm No 499
• 5 5ppm No 699
• 6 5ppm No 899
• 7 8ppm Yes 499
• 8 8ppm Yes 699
• 9 8ppm Yes 899
• 10 8ppm No 499
• 11 8ppm No 699
• 12 8ppm No 899
• 13 10ppm Yes 499
• 14 10ppm Yes 699
• 15 10ppm Yes 899
• 16 10ppm No 499
• 17 10ppm No 699
• 18 10ppm No 899

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Conjoint Analysis Demonstration
http//www.surveysite.com/newsite/docs/conjoint-ex
ample.html
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Summary Conjoint Basics

• Involves presenting respondents with alternative
  choice situations and having them rank the
  alternatives.
• Computer model decomposes these preferences by
  analyzing what features have been consistently
  present or traded-off in the way choices were
  rank-ordered.
• Output of model is a set of numerical values
  associated with every feature and feature level,
  which portrays the relative importance of each to
  the individual.