Conjoint Analysis
Conjoint Analysis
Conjoint Analysis
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Conjoint Analysis
Basic Principle
Conjoint Analysis
Basic Principle
The presentation explains the principle, using a simple example. It shows, how to calculate the part-worth utilities and how to derive the relative preferences from individual attributes from there. A full factorial and a fractional factorial design is used. An Excel template for this example is available from the author.
Conjoint analysis or Stated preference analysis is a statistical technique that originated in mathematical psychology.
07.07.10
Conjoint Analysis
Basic Principle
Keywords conjoint analysis, stated preference analysis, linear regression, product management, marketing, part-worth, utilities, relative preference, statistics, analytic hierarchy process, AHP
Today it is used in many of the social sciences and applied sciences including - Marketing, - Product management, - Operations research.
Conjoint Analysis
Basic Principle Buying a smart phone, MP3 player a b Your Preference The preference for a combination of (conjoint) attributes will reveal the partworth of individual attributes. Attribute 1: Memory Attribute 2: Delivery Attribute 1: Memory Attribute 2: Delivery
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Conjoint Analysis
Basic Principle Buying a smart phone, MP3 player
b The preference for a combination of (conjoint) attributes will reveal the partworth of individual attributes.
Conjoint Analysis
Basic Principle Buying a smart phone, MP3 player
Part-worth utilities of individual attributes are calculated based on the ranking of a defined set of combinations of attribute values.
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Conjoint Analysis
Basic Principle Buying a smart phone, MP3 player
Attributes:
Color Memory
green, red 16 MB, 64 MB 1 day, 1 week 5 6 7 8 Green, 16 MB, 1 day Red, 16 MB, 1 day Green, 64 MB, 1 day Red, 64 MB, 1 day
Attribute values are coded with -1 and +1 Attribute 1: Color Attribute 2: Memory Attribute 2: Delivery
Levels: -1; +1
Models: 1 2 3 4
Delivery
Green, 16 MB, 1 week Red, 16 MB, 1 week Green, 64 MB, 1 week Red, 64 MB, 1 week
Sequence
Delivery
Memory
Conjoint Analysis
Basic Principle
Conjoint Attributes Green, 16 MB, 1 week Red, 16 MB, 1 week Green, 64 MB, 1 week Red, 64 MB, 1 week Green, 16 MB, 1 day Red, 16 MB, 1 day Green, 64 MB, 1 day Red, 64 MB, 1 day
1 2 3 4 5 6 7 8
-1 1 -1 1 -1 1 -1 1
Color
-1 -1 1 1 -1 -1 1 1
-1 -1 -1 -1 1 1 1 1 Attribute values are coded with -1 and +1 Attribute 1: Color Attribute 2: Memory Attribute 2: Delivery Example Buying a smart phone
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Conjoint Analysis
Basic Principle
Design Matrix -1 1 -1 -1 -1 1 1 -1 -1 1 1 -1 -1 -1 -1 1 1 1 1 Design Matrix k attributes: 2k possible combinations Full factorial Design
k attributes: 2k combinations
1 -1 1 -1 1
Conjoint Analysis
Basic Principle X1 7 5 delivery 6 8 1 2 3
or em y
X2 -1 -1 1 1 -1 -1 1 1
-1 1 -1 1 -1 1 -1 1
3 2
4 5 6 7 8
1 X2 X1 X3 color
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Sequence
Conjoint Analysis
Basic Principle Conjoint Attributes Green, 16 MB, 1 week Red, 16 MB, 1 week Green, 64 MB, 1 week Red, 64 MB, 1 week Green, 16 MB, 1 day Red, 16 MB, 1 day Green, 64 MB, 1 day Red, 64 MB, 1 day X1 -1 1 -1 1 -1 1 -1 1 X2 -1 -1 1 1 -1 -1 1 1 X3 -1 -1 -1 -1 1 1 1 1 Rank 8 7 4 3 6 5 2 1 X1: Color = (+1,-1) X2: Memory = (+1,-1) X3: Delivery = (+1,-1) Ranking of combinations
1 2 3 4 5 6 7 8
Conjoint Analysis
Basic Principle Linear model function with part-worth utilities
Ranking = part-worth of attribute 1 * attribute 1 level + part-worth of attribute 2 * attribute 2 level + part-worth of attribute 3 * attribute 3 level + baseline preference
Y=
color*X1
memory*X2
delivery*X3 +
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Conjoint Analysis
Rank Basic Principle Part-worth utilities = -1 1 -1 1 -1 1 -1 1 * + -1 -1 1 1 -1 -1 1 1 * + -1 -1 -1 -1 1 1 1 1 * + Linear Model Function
The system of linear equations can be solved with linear regression
8 7 4 3 6 5 2 1
Color
Memory
Delivery
X1 7 5 6 8 1 2 3 3 1 2 4 4 5 6 7 8 -1 1 -1 1 -1 1 -1 1
X2 -1 -1 1 1 -1 -1 1 1
X3 -1 -1 -1 -1 1 1 1 1
Conjoint Analysis
Basic Principle
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Conjoint Analysis
Basic Principle X1 7 5 6 8 1 2 3 3 1 X1 Main effect X1
Col=
X2 -1 -1 1 1 -1 -1 1 1
X3 -1 -1 -1 -1 1 1 1 1
-1 1 -1 1 -1 1 -1 1
Rank 8 7 4 3 6 5 2 1
Color
4 2
4 5 6 7 8
Conjoint Analysis
Basic Principle X1 7 5 6 8 1 2 3 3 1 X2 Main effect X2
Mem=
X2 -1 -1 1 1 -1 -1 1 1
X3 -1 -1 -1 -1 1 1 1 1
-1 1 -1 1 -1 1 -1 1
Rank 8 7 4 3 6 5 2 1
Color Memory
4 2
4 5 6 7
[10 10 - 26 26] 2 =
-2
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Conjoint Analysis
Basic Principle X1 7 5 6 8 1 2 3 3 1 X3 Main effect X3
Del=
X2 -1 -1 1 1 -1 -1 1 1
X3 -1 -1 -1 -1 1 1 1 1
-1 1 -1 1 -1 1 -1 1
Rank 8 7 4 3 6 5 2 1
Color Memory
4 2
4 5 6 7
Delivery
[14 14 - 22 22] 2 =
-1
Conjoint Analysis
Basic Principle
7 5 6
Color
-0.5 -2 -1
3 1 2
Mem
Del
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Conjoint Analysis
Basic Principle Actual ranking and description with linear model function
9 8 7 6 5 4 3 2 1 0 1 week 16 MB green 1 week 16 MB red 1 week 64 MB green 1 week 64 MB red 1 day 16 MB green 1 day 16 MB red 1 day 64 MB green 1 day 64 MB red Rank Model
= - 0.5 = -2 = -1
Conjoint Analysis
Basic Principle Actual ranking and description with linear model function
9 8 7 6 5 4 3 2 1 0 1 week 16 MB green 1 week 16 MB red 1 week 64 MB green 1 week 64 MB red 1 day 16 MB green 1 day 16 MB red 1 day 64 MB green 1 day 64 MB red Rank Model
= - 0.5 = -2 = -1
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Conjoint Analysis
Basic Principle
7 5 6
Col
Mem
Del
Conjoint Analysis
Basic Principle Conjoint Analysis Attributes Part-worth Utilities Levels Ranking AHP Criteria, Sub-criteria - comparison Weights: Principal Eigenvector Ratio Scale, relative Scale Evaluation of Alternatives Conjoint Analysis & Analytic Hierarchy Process AHP
2k
Combinations
k2 k 2
Comparisons
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Conjoint Analysis
Basic Principle X1 7 5 6 8 1 2 3 3 1 2 4 4 5 6 7 8 -1 1 -1 1 -1 1 -1 1 X2 -1 -1 1 1 -1 -1 1 1 X3 -1 -1 -1 -1 1 1 1 1 Rank 8 7 4 3 6 5 2 1
Fractional Design
Conjoint Analysis
Basic Principle X1 7 5 6 8 1 2 3 3 1 2 4 4 5 6 7 8 -1 1 -1 1 -1 1 -1 1 X2 -1 -1 1 1 -1 -1 1 1 X3 -1 -1 -1 -1 1 1 1 1 Rank 8 7 4 3 6 5 2 1
Fractional Design
Graphical Representation
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Conjoint Analysis
Basic Principle X1 7 5 6 8 2 3 3 1 2 4 5 -1 -1 1 6 1 -1 -1 1 -1 -1 7 4
Fractional Design
X2
X3
23-1
Fractional design
23-1
III
3 = 12
Conjoint Analysis
Basic Principle X1 4 3 1 2 3 2 1 4 1 -1 -1 1 X2 -1 1 -1 1 X3 -1 -1 1 1 Rank 7 4 6 1
Fractional Design
Graphical Representation
23-1
Fractional design
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Conjoint Analysis
Basic Principle Fractional factorial design 2k-p 4 3 1 2 3 2 1 4 X1 1 -1 -1 1 X2 -1 1 -1 1 X3 -1 -1 1 1 Rank 7 4 6 1 Calculating Part-worth Utilities
Color
Fractional Design
Graphical Representation
X1 Main effect X1
= - 0.5
[(7+1)(4+6)] 2 = -0.5
Conjoint Analysis
Basic Principle Fractional factorial design 2k-p 4 3 1 2 3 2 1 4 X1 1 -1 -1 1 X2 -1 1 -1 1 X3 -1 -1 1 1 Rank 7 4 6 1 Calculating Part-worth Utilities
Color
Fractional Design
Graphical Representation
X2 Main effect X2
Memory
= - 0.5 = -2
[(4+1)(7+6)] 2 = -2
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Conjoint Analysis
Basic Principle Fractional factorial design 2k-p 4 3 1 2 3 2 1 4 X1 1 -1 -1 1 X2 -1 1 -1 1 X3 -1 -1 1 1 Rank 7 4 6 1 Calculating Part-worth Utilities
Color
Fractional Design
Graphical Representation
X3 Main effect X3
Memory Delivery
= - 0.5 = -2 = -1
[(6+1)(7+4)] 2 = -1
Conjoint Analysis
Basic Principle
Fractional Design
Using a fractional factorial design the number of attribute combinations can be reduced.
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Conjoint Analysis
Basic Principle
Simple conjoint analysis can be done with linear regression, but more sophisticated statistical models and solutions are available.
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