Regardless of which area a product or service belongs to, one thing they have in common is the difficulty for consumers to identify the importance of their individual features: how important is the amount of internal memory of a smartphone compared to the size of its display? What difference does it make to holidaymakers if the holiday is two weeks long instead of just 10 days?
This is where conjoint analyses can be applied with their special study design and corresponding approach to the evaluation process. Study participants do not evaluate individual features nor their importance. Instead, a selection of various, concrete products is repeatedly presented the participants. The participants’ task is to choose one of the configurations of the product. Based on the survey data obtained, it is possible to subsequently determine the importance of individual characteristics and their values from the overall decisions (selections).
We typically use conjoint analyses to determine the (expected) market share, because the proportion of consumers who would choose which product can be estimated based on the importance of individual characteristics. This is done through so-called market simulations.
The questions focus on products that are often innovations or further developments of existing products in which the competitive environment is already known. Caution should be exercised if the products are so innovative that there would not be enough certainty to ensure the validity of the respondent’s decision. The most reliable results are achieved if consumers are very familiar with the product and if the innovation is essentially an additional development or an improvement of the product’s properties.
Pricing studies are another important area of conjoint analyses. While other pricing approaches also involve determining an ideal price from a psychological perspective, conjoint analyses often aim to estimate how price changes affect the consumers choice and how this would thus change the market share.