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Statistics
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Often we want to identify the ideal product/service, or we wish to understand where it would be best to make improvements in a product to maximise sales. Sometimes we want to understand things that are very difficult to grasp, such as brand value. Ideal methods here are trade off and conjoint techniques.
Use of these techniques does demand pre-planning, so that data is collected
in an appropriate manner.
Trade Off
This is the simplest method, most often used for brand–price trade off. Respondents are asked to choose between a sequence of brands at a variety of prices. Subsequent analysis allows each brand and each price level to be given a relative weight. These may be combined to calculate predicted market shares at given price levels. It also permits calculation of price elasticity. It can be used to model the effect of hypothetical brands in the market, or the outcome of brand withdrawal.
Conjoint Analysis
This extends the number of attributes beyond the simple two cases (brand- price). Generally between 5 and 8 attributes can be included, each of which can have a number of levels (generally no more than 4 or 5). It identifies the relative importance of each of the attributes, and the relative contribution of each level for each attribute. These can be used, for example, to model market shares, indicate the likely outcome of altering attribute levels, and predicting likely changes in response to new market entrants.
SIMALTO
Simultaneous Multi-Attribute Trade Off is an extension of the trade off technique. Respondents are required to place a value on their chosen attribute level preferences, and are encouraged to identify what is unacceptable. Again this technique identifies the relative importance of each of the attributes, and the relative contribution of each level for each attribute. It requires considerable time input from respondents, so tends to be the major part of an interview. However, it does permit a large degree of market modelling, and by placing costs on the various attribute levels it can help guide investment decisions. |
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