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University of Washington EMBA Program Regional 20

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Supplier (Compaq, Packard Bell, Toshiba) Example: Personal Computers ... Toshiba = 8 1 2 = 11. Packard Bell = 6 1 4 = 11 ... Toshiba. Additional Comments... – PowerPoint PPT presentation

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Title: University of Washington EMBA Program Regional 20


1
University of Washington EMBA Program Regional 20
  • Conjoint Analysis
  • TA Rory McLeod
  • October 7, 2003

2
What is Conjoint Analysis?
  • A quantitative analysis used to estimate
    customers value systems
  • Requires that a product be broken down into a set
    of attributes
  • Value system how much value a consumer puts on
    each level of each of the attributes

3
Uses of Conjoint Analysis
  • Learning more about your potential customer
    segments
  • Further market segmentation
  • New product development
  • Extending types of products within a category
  • Entering a new category
  • Determining optimal positioning

4
Conjoint Analysis Method
  • Step 1 Identify key product attributes and
    levels of attributes for the product class
  • Focus groups / managerial input
  • Step 2 Select combinations of attributes and
    attribute levels
  • Can the customers figure out the differences in
    the attributes and how they impact the benefits?
  • Step 3 Prepare a representation of each design
  • Prototypes / sketches
  • Step 4 Subjects rank the designs
  • Step 5 Analyze data to develop relative
    importance of each attribute

5
Example Personal Computers
  • Step 1. Key Attributes and Levels of Attributes
  • Speed (1X, 2X, 3X)
  • Software (None, Limited, Extensive)
  • Price (Current, 20 Higher, 40 Higher)
  • Supplier (Compaq, Packard Bell, Toshiba)

6
Example Personal Computers
  • Step 2. Combinations of Attribute Levels

System A Speed 1X Software Limited Price
Current
Supplier Compaq
System C Speed 1X Software None Price 40
Higher
Supplier Toshiba
System B Speed 1X Software Extensive Price
20 Higher
Supplier Packard Bell
System D Speed 2X Software Extensive Price
Current
Supplier Toshiba
System E Speed 2X Software None Price 20
Higher
Supplier Compaq
System F Speed 2X Software Limited Price
40 Higher
Supplier Packard Bell
System G Speed 3X Software None Price Cu
rrent
Supplier Packard Bell
System H Speed 3X Software Limited Price
20 Higher
Supplier Toshiba
System I Speed 3X Software Extensive Price
40 Higher
Supplier Compaq
  • Use software to select product combinations such
    that attributes are uncorrelated (orthogonal).

7
Example Personal Computers
  • Step 3/4. Designs are ranked

System A 5 Speed 1X Software Limited Pric
e Current
Supplier Compaq
System C 8 Speed 1X Software None Price
40 Higher
Supplier Toshiba
System B 6 Speed 1X Software Extensive Pr
ice 20 Higher
Supplier Packard Bell
System D 1 Speed 2X Software Extensive Pr
ice Current
Supplier Toshiba
System E 7 Speed 2X Software None Price
20 Higher
Supplier Compaq
System F 9 Speed 2X Software Limited Pric
e 40 Higher
Supplier Packard Bell
System G 3 Speed 3X Software None Price
Current
Supplier Packard Bell
System H 2 Speed 3X Software Limited Pric
e 20 Higher
Supplier Toshiba
System I 4 Speed 3X Software Extensive Pr
ice 40 Higher
Supplier Compaq
Customer Preference (most preferred to least)
D,H,G,I,A,B,E,C,F
8
Example Personal Computers
  • Step 5. Data Analysis
  • Determine individual scores for each attribute by
    summing the scores for that attribute.

Software None 873 18 Limited 592 16

Extensive 614 11
System A 5 Speed 1X Software Limited Pric
e Current
Supplier Compaq
System C 8 Speed 1X Software None Price
40 Higher
Supplier Toshiba
System B 6 Speed 1X Software Extensive Pr
ice 20 Higher
Supplier Packard Bell
Manufacturer Compaq 574 16 Toshiba 81
2 11
Packard Bell 614 11
System D 1 Speed 2X Software Extensive Pr
ice Current
Supplier Toshiba
System E 7 Speed 2X Software None Price
20 Higher
Supplier Compaq
System F 9 Speed 2X Software Limited Pric
e 40 Higher
Supplier Packard Bell
Price Current 513 9 20 Higher 672
15
40 Higher 894 21
System G 3 Speed 3X Software None Price
Current
Supplier Packard Bell
System H 2 Speed 3X Software Limited Pric
e 20 Higher
Supplier Toshiba
System I 4 Speed 3X Software Extensive Pr
ice 40 Higher
Supplier Compaq
Speed 1X 568 19 2X 179 17 3X 32
4 9
9
Example Personal Computers
  • Step 5. Data Analysis
  • Rank attributes and summed attribute scores from
    lowest to highest (Xs below).
  • Determine the maximum score and minimum score.
  • Rescale the raw scores using the following
    Normalization Formula

10
Example Personal Computers
  • For each attribute, determine its importance and
    plot a preference curve.

11
Example Personal Computers
  • For each attribute, determine its importance and
    plot a preference curve.

12
Example Personal Computers
  • You can then evaluate the attractiveness of
    actual products you might bring to market…

13
Additional Comments…
  • For more accurate data analysis, can use
    multivariate regression (for rankings) or ANOVA
    (for ratings)
  • Always test the validity of your results
  • Red-Face Test Do the results make sense?
  • Holdout Prediction (a small of the ranked
    products are held out of the calculations)
  • Actual vs. predicted market share
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