Basically what it is, it is a statistical technique to determine
how people value different product attributes.
So if you have products with multiple attributes, and
one of those attributes of course can be price, we want to find a way to
understand how people will trade off one attribute for
another, or maybe price for a particular upgrade that you might be offering them.
I tell you right now, this is generally not something that's done in
like an Excel spreadsheet, there's specialized software for doing this work.
And in the resources we have some links to some technical papers,
that we'll discuss even more aspects of conjoint analysis.
But we're going to discuss a lot of those aspects right here and right now.
So, conjoint analysis in its most basic form is not new.
It goes back to the 1970s and some operations research techniques.
If you don't know what operations research is,
all that is is the mathematical modeling of things like production processes.
Believe it or not, conjoint analysis which is a statistical technique for
preferences, comes out of the same mathematics used to look
at assembly line process and other kind of business processes.
That started in the 1970s.
In the 1980s it got a little more popular because people would use note cards,
and people would add access to software that would help them do regressions,
basic forms of regressions.
Specialized software started in the 1990s to do conjoint analysis.
And web-based interviewing techniques so
that people could gave you data via web application, started about 2005.
Now it's gotten really popular, and one of the reasons it's gotten really popular
is you get very quick results using things like online panel.
I'll just mention one, there are many of them.
Something called Amazon Mechanical Turk where you can literally go on online,
put your conjoint interview or your conjoint experiment online.
Go to bed, wake up the next morning, and
you've got a couple of thousand people that have filled this kind of thing out.
That's how fast it's gotten with online web-based interviewing techniques and
these panels that people sign up for.
Now, what are some of the applications?
Lots of different applications have conjoint analysis.
The first cellular telephone, I know that's a long time ago, but the first
cellular telephone by AT&T, was designed with an early form of conjoint analysis.
The Baltimore Ravens, the NFL team in Baltimore, designed their logo,
the famous, you've got kind of a purple raven right here,
which has attributes like color and design.
They used the conjoint analysis to design that.
Courtyard by Marriott, the whole hotel,
was design with the big conjoint study using business travelers as respondents.
FedEx started a new ground-based express service,
used conjoint analysis to measure preferences.
And IBM used it to design one of their microchips.
What are the attributes that people want to see in a microchip?
I know these are a lot of applications,
but I want you to see the breath of what it's capable of doing.
Dinner's Club which is a credit card.
Credit cards have a lot of attributes,
that was designed with the conjoint analysis, even a drug.
In this case, an anti-hypertensive for the heart, right?
Was designed with a conjoint analysis, so was The Ritz-Carlton, some of their
services in the Ritz-Carlton, UPS designed a new delivery service.
And finally, the United States Navy wanted more of their enlisted personnel
to re-enlist, to come back into the navy, and
they designed benefit packages for those who might consider re-enlisting.
And they used conjoint analysis to figure out what exactly did those enlisted people
want when we asked them would they want to re-enlist or not.