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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 SimpsonManaging Director and Lead Consultant
www.planninginnovations.com
www.planninginnovations.com© Copyright Survey Analytics | 3518 Fremont Ave N #598 | Seattle WA 98103
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
What Is Discrete Choice Conjoint Analysis?
• Quantitative research toolo Forces customers to make choices
similar to real lifeo Derive “utility” value of attributes
and levels from these choiceso Very powerful.. And dangerous
• Limitation: closed exploration
• Applications:o Brand valueo Feature trade-offso Potential market shareo Product competitivenesso “What if” scenarios o 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
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?
Questions through the Innovation Life Cycle
Research techniques must reflect innovation stage
www.planninginnovations.com
Two Major Stages at the Front End of Innovation
Discovery(Divergence)
Validation(Convergence)
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More Specifically…
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
ConvergenceMethods
Convergence Methods- Evaluation, numbers, priorities- Validated opportunities
Goal? A quantified opportunity leading to a valid business case to fund, kill, or shelf
www.planninginnovations.com
Conjoint in the Innovation Process?
• “Innovation” has some unique goals:o Ability to focus R&D efforts o Necessity to understand and quantify customer needso The need to quantify the value of technology investmentso 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?
o 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
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
www.planninginnovations.com
Overview
• 97 Responses o Guide general direction (200+ provides statistical validity)
• Online discrete choice conjoint via Survey Analytics • Targeted homogenous database: Aperion internal
o All audiophiles, mostly meno 57% previously purchased an Aperion producto 84% completion rate
• Goalso Understand preference of various subwoofer formatso Estimate the relative value of different features and functionso Provide guidance on how customers are thinking about
Relative importance of features Value associated with features
www.planninginnovations.com
Tradeoff Exhibits
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
www.planninginnovations.com
Conjoint Design
Consistent AttributeProving a consistent
visual display of attributes and levels helps the user stay refreshed of their
options.
Options trade-offThe core of the study is
having respondents decide on a preference to a specific bundle of features at a specific
price.
www.planninginnovations.com
What Are We Looking For?
• Results we didn’t expecto Which utilities surprised us? Why?
• Clues to how customers are really making decisionso Which features or functions are
driving real decisions? o Which features could be even
further emphasized or enhanced?
• Following these clues further can lead to:o Owning new positions in the marketo Higher margin products and
serviceso Clearer guidance to development
efforts
UtilitiesNumerical representation of the value respondents place on each level of an
attribute using an arbitrary scale.
Relative ImportanceBased on utilities, we can calculate how
important each attribute is to the respondent’s overall decisions.
Market SimulationsProving a consistent visual display of
attributes and levels helps the user stay refreshed of their options.
www.planninginnovations.com
Sample Learning
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?
www.planninginnovations.com
Considerations for Using Conjoint to Innovate
1. Just like all research, don’t treat results like “answers”o Results provide clues, guidance, and additional datao Identify interesting data that can guide next stepso New concepts may require further research to better understando 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 advantageo Waiting until the product is “nearly complete” means results are
academic or can only be used for outbound marketing o Multiple stages of Conjoint Analysis can fine-tune specific features,
attributes, pricing, and promotion strategies
How Do You Develop a Conjoint Study?