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This document discusses how conjoint analysis can be used in the innovation process. It provides an overview of conjoint analysis and how it can help answer questions about feature priorities, pricing, and market share predictions. The document then discusses a case study where conjoint analysis was used by Aperion Audio to understand what factors drive consumer decisions for speakers and what value they place on certain features. The results provided guidance to direct R&D efforts and product positioning.

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How to Use Conjoint Analysis in the Innovation Process “ If you can’t describe what you’re doing as a process, you don’t know what you’re doing.“ - W. Edwards Deming – Father of Quality Movement
© Copyright Survey Analytics | 3518 Fremont Ave N #598 | Seattle WA 98103 Who is Planning Innovations Group? Started in 2002 in Portland, OR Clients from startups through Fortune 500 GE, Tyco, Motorola, Owens Corning We give companies tools and methods to innovate faster and more efficiently Dorian Simpson Managing Director and Lead Consultant www.planninginnovations.com
Today’s Agenda What is Conjoint Analysis? An overview of the Innovation process How can we use “Conjoint Analysis” to innovate? How can Conjoint Studies that provide guidance in innovation planning? How do you develop a conjoint study? How can Conjoint Studies help you predict potential market share for new product concepts? Case Study: Aperion Audio Speakers Q&A www.planninginnovations.com © Copyright Survey Analytics | 3518 Fremont Ave N #598 | Seattle WA 98103
What Is Discrete Choice Conjoint Analysis? Quantitative research tool Forces customers to make choices similar to real life Derive “utility” value of attributes and levels from these choices Very powerful.. And dangerous Limitation: closed exploration www.planninginnovations.com Applications: Brand value Feature trade-offs Potential market share Product competitiveness “ What if” scenarios Price elasticity www.compareandsave.com Attributes Levels
TV’s on Bestbuy.com Customers must always make feature/price tradeoffs… How important is… Refresh rate? Resolution? Picture-in-Picture? … to the purchase decision? To the price?
A Short Intro to Innovation Processes
Questions through the Innovation Life Cycle www.planninginnovations.com Capturing Ideas and Opportunities? Customer Problems? Trends of Interest? Feature priorities? Value questions? Market size? Pricing? Take rate? Usability? Readiness? Messages? Marketing and Sales Programs? Research techniques must reflect innovation stage
Two Major Stages at the Front End of Innovation www.planninginnovations.com Discovery (Divergence) Validation (Convergence)
More Specifically… www.planninginnovations.com Divergent Methods - Customer Problems? Trends? - New opportunities! Goal? A wide range of potential, valuable opportunities that can drive your strategic and development activities Divergence Methods Convergence Methods Convergence Methods - Evaluation, numbers, priorities - Validated opportunities Goal? A quantified opportunity leading to a valid business case to fund, kill, or shelf
Conjoint in the Innovation Process? “ Innovation” has some unique goals: Ability to focus R&D efforts Necessity to understand and quantify customer needs The need to quantify the value of technology investments The need to investigate value/investment tradeoffs... E.g. If we solve this… or do a better job, what is it worth to customers? If we build this, how many will we sell over current models? How might this new capability (or feature) canibilize sales? Conjoint Analysis can help answer these questions more accurately than ranking or general price sensitivity questions. www.planninginnovations.com
Case Study: Aperion Audio Discrete Choice Conjoint www.planninginnovations.com Aperion Audio High quality audio Direct to consumers What factors drive consumer decisions? What value do they place on certain features? Need answers to: Direct R&D efforts Position products Develop messages and promotions
Overview 97 Responses Guide general direction (200+ provides statistical validity) Online discrete choice conjoint via Survey Analytics Targeted homogenous database: Aperion internal All audiophiles, mostly men 57% previously purchased an Aperion product 84% completion rate Goals Understand preference of various subwoofer formats Estimate the relative value of different features and functions Provide guidance on how customers are thinking about Relative importance of features Value associated with features www.planninginnovations.com
Tradeoff Exhibits www.planninginnovations.com Six Attributes + Price Pictures help customer visual options Organize similar to real world Levels Goal – keep levels low to minimize quantity of respondents necessary and enable simpler options
Conjoint Design www.planninginnovations.com Consistent Attribute Proving a consistent visual display of attributes and levels helps the user stay refreshed of their options. Options trade-off The core of the study is having respondents decide on a preference to a specific bundle of features at a specific price.
What Are We Looking For? Results we didn’t expect Which utilities surprised us? Why? Clues to how customers are really making decisions Which features or functions are driving real decisions? Which features could be even further emphasized or enhanced? Following these clues further can lead to: Owning new positions in the market Higher margin products and services Clearer guidance to development efforts www.planninginnovations.com Utilities Numerical representation of the value respondents place on each level of an attribute using an arbitrary scale. Relative Importance Based on utilities, we can calculate how important each attribute is to the respondent’s overall decisions. Market Simulations Proving a consistent visual display of attributes and levels helps the user stay refreshed of their options.
Sample Learning www.planninginnovations.com Power is critical to the decision! Almost one-fourth of the decision is based on the power rating – requires further investigation. How are consumers thinking about ‘Power’? Is this a proxy for sound quality? Frequency was relatively unimportant! Even with a wide frequency range, it was still only 5% of the consumer’s decision. Why is that? In this price range, there was less emphasis on price than expected. Certainly an area that Aperion will want to learn more about. E.g. Are they underpricing?
Considerations for Using Conjoint to Innovate Just like all research, don’t treat results like “answers” Results provide clues, guidance, and additional data Identify interesting data that can guide next steps New concepts may require further research to better understand Triangulate! Use conjoint along with other data from online surveys, through social networking, focus groups, and expert opinion, etc. Conducting fast, cost-effective conjoint studies early and consistently can provide a competitive advantage Waiting until the product is “nearly complete” means results are academic or can only be used for outbound marketing Multiple stages of Conjoint Analysis can fine-tune specific features, attributes, pricing, and promotion strategies www.planninginnovations.com
How Do You Develop a Conjoint Study?

More Related Content

Planning Innovations: Conjoint Analysis Slides

  • 1. How to Use Conjoint Analysis in the Innovation Process “ If you can’t describe what you’re doing as a process, you don’t know what you’re doing.“ - W. Edwards Deming – Father of Quality Movement
  • 2. © Copyright Survey Analytics | 3518 Fremont Ave N #598 | Seattle WA 98103 Who is Planning Innovations Group? Started in 2002 in Portland, OR Clients from startups through Fortune 500 GE, Tyco, Motorola, Owens Corning We give companies tools and methods to innovate faster and more efficiently Dorian Simpson Managing Director and Lead Consultant www.planninginnovations.com
  • 3. Today’s Agenda What is Conjoint Analysis? An overview of the Innovation process How can we use “Conjoint Analysis” to innovate? How can Conjoint Studies that provide guidance in innovation planning? How do you develop a conjoint study? How can Conjoint Studies help you predict potential market share for new product concepts? Case Study: Aperion Audio Speakers Q&A www.planninginnovations.com © Copyright Survey Analytics | 3518 Fremont Ave N #598 | Seattle WA 98103
  • 4. What Is Discrete Choice Conjoint Analysis? Quantitative research tool Forces customers to make choices similar to real life Derive “utility” value of attributes and levels from these choices Very powerful.. And dangerous Limitation: closed exploration www.planninginnovations.com Applications: Brand value Feature trade-offs Potential market share Product competitiveness “ What if” scenarios Price elasticity www.compareandsave.com Attributes Levels
  • 5. TV’s on Bestbuy.com Customers must always make feature/price tradeoffs… How important is… Refresh rate? Resolution? Picture-in-Picture? … to the purchase decision? To the price?
  • 6. A Short Intro to Innovation Processes
  • 7. Questions through the Innovation Life Cycle www.planninginnovations.com Capturing Ideas and Opportunities? Customer Problems? Trends of Interest? Feature priorities? Value questions? Market size? Pricing? Take rate? Usability? Readiness? Messages? Marketing and Sales Programs? Research techniques must reflect innovation stage
  • 8. Two Major Stages at the Front End of Innovation www.planninginnovations.com Discovery (Divergence) Validation (Convergence)
  • 9. More Specifically… www.planninginnovations.com Divergent Methods - Customer Problems? Trends? - New opportunities! Goal? A wide range of potential, valuable opportunities that can drive your strategic and development activities Divergence Methods Convergence Methods Convergence Methods - Evaluation, numbers, priorities - Validated opportunities Goal? A quantified opportunity leading to a valid business case to fund, kill, or shelf
  • 10. Conjoint in the Innovation Process? “ Innovation” has some unique goals: Ability to focus R&D efforts Necessity to understand and quantify customer needs The need to quantify the value of technology investments The need to investigate value/investment tradeoffs... E.g. If we solve this… or do a better job, what is it worth to customers? If we build this, how many will we sell over current models? How might this new capability (or feature) canibilize sales? Conjoint Analysis can help answer these questions more accurately than ranking or general price sensitivity questions. www.planninginnovations.com
  • 11. Case Study: Aperion Audio Discrete Choice Conjoint www.planninginnovations.com Aperion Audio High quality audio Direct to consumers What factors drive consumer decisions? What value do they place on certain features? Need answers to: Direct R&D efforts Position products Develop messages and promotions
  • 12. Overview 97 Responses Guide general direction (200+ provides statistical validity) Online discrete choice conjoint via Survey Analytics Targeted homogenous database: Aperion internal All audiophiles, mostly men 57% previously purchased an Aperion product 84% completion rate Goals Understand preference of various subwoofer formats Estimate the relative value of different features and functions Provide guidance on how customers are thinking about Relative importance of features Value associated with features www.planninginnovations.com
  • 13. Tradeoff Exhibits www.planninginnovations.com Six Attributes + Price Pictures help customer visual options Organize similar to real world Levels Goal – keep levels low to minimize quantity of respondents necessary and enable simpler options
  • 14. Conjoint Design www.planninginnovations.com Consistent Attribute Proving a consistent visual display of attributes and levels helps the user stay refreshed of their options. Options trade-off The core of the study is having respondents decide on a preference to a specific bundle of features at a specific price.
  • 15. What Are We Looking For? Results we didn’t expect Which utilities surprised us? Why? Clues to how customers are really making decisions Which features or functions are driving real decisions? Which features could be even further emphasized or enhanced? Following these clues further can lead to: Owning new positions in the market Higher margin products and services Clearer guidance to development efforts www.planninginnovations.com Utilities Numerical representation of the value respondents place on each level of an attribute using an arbitrary scale. Relative Importance Based on utilities, we can calculate how important each attribute is to the respondent’s overall decisions. Market Simulations Proving a consistent visual display of attributes and levels helps the user stay refreshed of their options.
  • 16. Sample Learning www.planninginnovations.com Power is critical to the decision! Almost one-fourth of the decision is based on the power rating – requires further investigation. How are consumers thinking about ‘Power’? Is this a proxy for sound quality? Frequency was relatively unimportant! Even with a wide frequency range, it was still only 5% of the consumer’s decision. Why is that? In this price range, there was less emphasis on price than expected. Certainly an area that Aperion will want to learn more about. E.g. Are they underpricing?
  • 17. Considerations for Using Conjoint to Innovate Just like all research, don’t treat results like “answers” Results provide clues, guidance, and additional data Identify interesting data that can guide next steps New concepts may require further research to better understand Triangulate! Use conjoint along with other data from online surveys, through social networking, focus groups, and expert opinion, etc. Conducting fast, cost-effective conjoint studies early and consistently can provide a competitive advantage Waiting until the product is “nearly complete” means results are academic or can only be used for outbound marketing Multiple stages of Conjoint Analysis can fine-tune specific features, attributes, pricing, and promotion strategies www.planninginnovations.com
  • 18. How Do You Develop a Conjoint Study?

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