Conjoint analysis, also referred to as discrete choice, has been in use for decades. What has led to its popularity? Why does it keep researchers, academicians, and research end-users engaged? In short, why do we still love conjoint?
In 1983, as I was completing my MBA at the University of Chicago (now known as Booth), I had an interview with Joe Curry and Sue Weiss of John Morton Company. They explained a market research technique, conjoint analysis, and discussed how this advanced quantitative technique was being used to address a variety of business questions. As a quant type who enjoyed mathematical “story problems” because they involved application of concepts, I was hooked. After I was hired, I had the good fortune to learn conjoint analysis from Rich Johnson, one of the founders of the firm and a pioneer in the field.
Almost 30 years later, I am still hooked on conjoint analysis (often referred to as discrete choice analysis). Why?
First, being an expert on the application of conjoint analysis has exposed me to fascinating strategic questions and allowed me to contribute to solutions. A few examples:
- Reduce the product line and make more money. A client had about a dozen products in their line-up, with subtle differences between them. To our surprise, we ran the conjoint simulation model and as we reduced the number of products in their line, the share held up. This was not a study objective but led to an important recommendation that fundamentally changed the client’s approach to their portfolio. They cut the line in half and experienced dramatic increases in profitability.
- Decrease price to gain share? Not when the price curve is inelastic! A client was hearing complaints about pricing from a few vocal customers and sales force members. They wanted to know how much to decrease price to achieve desired share. Conjoint analysis showed the price curve was inelastic; the right strategy was to increase price. They increased price and enjoyed healthy improvements in profitability.
- Conjoint brings out the competitive spirit… and insights. One client took a novel approach to using the conjoint model that predicted share of preference. They took staff (marketing, sales, engineers, etc.) offsite and created a team for each key competitor and a team for themselves. Each team was in a separate room with a conjoint model running. They all started with the same base scenario. Each team submitted a new strategy to a central model manager. The model manager ran a new scenario with all the submitted strategies and gave each team the results. They continued for several rounds. This forced the internal teams to really “get inside” the heads of their competitors and think about how to exploit the client’s vulnerabilities. They emerged with far better strategies to head off competitive threats.
Second, I am part of a community. Many research methods are developed within research firms and considered proprietary (AKA: black box). This limits discussion and improvement to those inside that firm. Fortunately, the developers of conjoint analysis have always known the method would be best enhanced with collective investigation, in the academic world and by practitioners. When I am tackling a difficult conjoint design question, I have many resources to draw on, within Sawtooth Technologies and beyond our walls. A spirit of sharing and “rising tide lifts all boats” can be found within the conjoint community.
Finally, I have the opportunity to find new applications. Most recently, I have had the opportunity to apply conjoint in a totally new way… to investigate cancer patient decision-making. This work is groundbreaking and is being used by top cancer researchers to consider scientific priorities and directions.
Booting up my computer each day, I find a plethora of puzzles waiting to be solved, and I have a variety of conjoint methods and a community of passionate practitioners to draw on. Together, we find answers that really make a difference to our clients’ businesses. And that’s why, after all these years, I still love conjoint.
Sawtooth Technologies Consulting
- Northbrook, Illinois
- We are experts in applying conjoint analysis to product development and pricing issues, leading to better informed, customer driven decisions.