Conjoint Models – Powerful Tools to Maximize Sales

Conjoint

Models –

Powerful Tools

to Maximize

Sales

2

COURSE OBJECTIVES

This course is designed to:

• Build an understanding of what conjoint models are, what they can do and how they are used

• Know what options are available and how to evaluate the most appropriate conjoint approach

• Share real-life conjoint and simulation examples in Home Improvements and other categories

This is not a course in:

• Survey design

• Mathematical or technical aspects of conjoint

• Forecasting

COURSE OBJECTIVES

This course is designed to:

• Build an understanding of what conjoint models are, what they can do and how they are used

• Know what options are available and how to evaluate the most appropriate conjoint approach

• Share real-life conjoint and simulation examples in Home Improvements and other categories

This is not a course in:

• Survey design

• Mathematical or technical aspects of conjoint

• Forecasting

3

What is conjoint?

• A method of understanding and predicting how people select one product or service over another

• Uses “trade-off” exercises that require people to choose or hypothetical offerings over alternatives

• A way to measure the impact of price and features on offering selection

• The basis for a “simulation” model that can estimate offering adoption and revenue

4

What does conjoint help us do?

• Gauge the importance of price and various product/service features

• Determine sensitivity to price and elasticity with other features

• Predict uptake given specific features and price points

• Identify optimal feature and price configurations

• Model impact of service-level changes

• Anticipate competitor responses

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Conjoint can be used to test:

• Entirely new product or service concepts prior to launch

• New or additional features of existing products/services

• Pricing strategies

• Branding and positioning strategies New brands and JVs Repositioning of existing brands

• Discontinuance of a product, service, line or brand Where will the business go?

• Service-level improvement initiatives

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Why do we need a “trade-off”?

• Alternative to reliance on articulated choices

• Purchasers (rationally) want the best of everything at the lowest cost

• All product/features may seem equally important or attractive

• Price is always important - especially if unbounded

• Trade-off exercise forces purchasers to choose what’s most important to them

• Features, price and brand

• Consistent patterns across trade-offs determine “importance” of features and price points

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Example: Will consumers pay more for a Lead-Safe faucet?

Will they pay:

•5% more?

•10% more?

•15% more?

•Will they buy it all?

8

Which faucet would you choose at each price premium for lead-free brass waterway?

Standard brass at $100.00 Lead-free brass at $100.00 X Standard brass at $100.00 Lead free brass at $105.00 XStandard brass at $100.00 X Lead-free brass at $110.00Standard brass at $100.00 X Lead free brass at $115.00

With only two options and four price points on one option, four simple choices will answer our questions

NOTE: We can adjust the $100 base price and all the offset prices depending on how much the customer plans to spend. For example, if the customer is shopping in the $300 range, the offset prices would be $315 (+5%), $330 (+10%) and $345 (+15%). This is more realistic than:•Having customers make choices in price ranges they aren’t shopping, or•Presenting percentages that require mental-math

Tip: Realism is critical in trade-off exercises!

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Results show expected volumes at each price point

FICTITIOUS DATA!

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Brass Lead-free Brass, same price as brass Plastic/PEX, same price as brass Brass Lead-free Brass, 5% more than brass Plastic/PEX, same price as brass Brass Lead-free Brass, 10% more than brass Plastic/PEX, same price as brass Brass Lead-free Brass, 15% more than brass Plastic/PEX, same price as brass Brass Lead-free Brass, same price as brass Plastic/PEX, 5% more than brass Brass Lead-free Brass, 5% more than brass Plastic/PEX, 5% more than brass Brass Lead-free Brass, 10% more than brass Plastic/PEX, 5% more than brass Brass Lead-free Brass, 15% more than brass Plastic/PEX, 5% more than brass Brass Lead-free Brass, same price as brass Plastic/PEX, 10% more than brass Brass Lead-free Brass, 5% more than brass Plastic/PEX, 10% more than brass Brass Lead-free Brass, 10% more than brass Plastic/PEX, 10% more than brass Brass Lead-free Brass, 15% more than brass Plastic/PEX, 10% more than brass Brass Lead-free Brass, same price as brass Plastic/PEX, 15% more than brass Brass Lead-free Brass, 5% more than brass Plastic/PEX, 15% more than brass Brass Lead-free Brass, 10% more than brass Plastic/PEX, 15% more than brass Brass Lead-free Brass, 15% more than brass Plastic/PEX, 15% more than brass

Which faucet would you choose at each price premium for lead-free brass or plastic/PEX waterway?

But it gets more complicated by adding just one more waterway material… 16 choices with 3 options each

Conjoint efficiently organizes more trade-offs than could otherwise be tested

• Becomes unmanageable with any more dimensions or options

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Actual Faucet Example

•Six brands

•Five features with 3-4 options each

• “Supply line material” feature only asked with “Supply lines included” option

•6 tested price-points (including “same as standard”)

•Two numeric “benefits” derived from feature option combinations

Tip: Keep features consistent and logically ordered!

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Conjoint Exercise: Feature Definitions

Tip: Clearly define all features especially if testing new concepts!

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13

Conjoint Exercise Screen

Tip: Conjoint exercise should be easy to read !

Tip: Change color schemes to highlight differences across screens

and indicate progress to avoid respondent fatigue!

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CONJOINT

BASELINE

SIMULATOR

OUTPUTPROJECTIONS

Conjoint and Simulation Process

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Simulator “Baseline”

• Required to forecast actual share-shifts, unit sales and/or revenue

• Not required simply to identify configuration that maximizes uptake

Total ConsumersShare 18.4%Change in Share 0.0%Share 12.3%Change in Share 0.0%Share 29.1%Change in Share 0.0%Share 13.4%Change in Share 0.0%Share 6.9%Change in Share 0.0%Share 19.9%Change in Share 0.0%

Kohler

American Standard

Other

Delta

Price Pfister

Moen

Tip: Baseline information should closely match what we are trying to forecast: e.g., current year sales (baseline) to forecast next year sales,

not installed base – may be very different from recent sales

FICTITIOUS DATA!

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Simulator Input: Baseline product configuration

Tip: Baseline configurations should come as close as possible to what each competitor actually offers

17

Simulator Input: “Other Brand” offering

Tip: Program simulator to easily recover baseline after simulated changes

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Delta Price Pfister Moen KohlerAmerican Standard

Other

Attribute Selected Level Selected Level Selected Level Selected Level Selected Level Selected Level

Material used for internal waterways Brass Brass Brass Brass Brass Plastic/PEX

Supply line inclusion and integration Not included Not included Not included Not included Not included Included, fully integrated

Type of valve Stainless steel ball valve Ceramic disc valve Cartridge valve Ceramic disc valve Ceramic disc valve Diamond seal valve

Warranty Limited lifetime warrantyLimited lifetime warrantyLimited lifetime warrantyLimited lifetime warrantyLimited lifetime warranty Limited lifetime warranty

Supply line material No supply line included No supply line included No supply line included No supply line included No supply line included Plastic/PEX

Price increase above baseline price 0% 0% 0% 0% 0% 0%

Simulator Output: “Other Brand” offering, no price change

Tip: It’s a good idea to display the scenario on the same simulator page as the output to keep track of simulations easily

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Other


Material used for internal waterways Brass Brass Brass Brass Brass Plastic/PEX

Supply line inclusion and integration Not included Not included Not included Not included Not included Included, fully integrated

Type of valve Stainless steel ball valve Ceramic disc valve Cartridge valve Ceramic disc valve Ceramic disc valve Diamond seal valve


Supply line material No supply line included No supply line included No supply line included No supply line included No supply line included Plastic/PEX


Simulator Output: “Other Brand” offering with 10% price increase

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DeltaPrice

PfisterMoen Kohler

American Standard

Other

Brass 0 1 0 1 1 0Lead-free brass 1 0 0 0 0 0Other metal (not brass) 0 0 1 0 0 0Plastic/PEX 0 0 0 0 0 1Supply line inclusion and integrationNot included 0 1 1 1 1 0Included, not integrated 0 0 0 0 0 0Included, fully integrated 1 0 0 0 0 1Type of valveCartridge valve 0 0 0 0 0 0Stainless steel ball valve 1 0 0 0 0 0Ceramic disc valve 0 1 0 1 1 0Diamond seal valve 0 0 1 0 0 1WarrantyNo warranty 0 0 0 0 0 0Standard 5-year warranty 0 0 0 0 0 0Limited lifetime warranty 1 1 1 1 1 1Supply line materialPlastic/PEX 0 0 0 0 0 1Braided stainless 1 0 0 0 0 0Braided synthetic 0 0 0 0 0 0Copper or stainless steel 0 0 0 0 0 0No supply line included 0 1 1 1 1 0Price increaseEnter a value above baseline price (0%-10%) 5 0 0 0 0 10

Ease of installation Easiest Standard Standard Standard Standard EasiestNumber of leak points 7 13 12 13 13 5

Material used for internal waterways

Simulator Input: Competitor response

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Other


Material used for internal waterways Lead-free brass Brass Other metal (not brass) Brass Brass Plastic/PEX

Supply line inclusion and integration Included, fully integrated Not included Not included Not included Not included Included, fully integrated

Type of valve Stainless steel ball valve Ceramic disc valve Diamond seal valve Ceramic disc valve Ceramic disc valve Diamond seal valve


Supply line material Braided stainless No supply line included No supply line included No supply line included No supply line included Plastic/PEX


Total ConsumersShare 19.8%Change in Share 1.4%Share 11.4%Change in Share -0.9%Share 30.2%Change in Share 1.1%Share 12.3%Change in Share -1.1%Share 6.2%Change in Share -0.7%Share 20.1%Change in Share 0.2%

Kohler

American Standard

Other

Delta

Price Pfister

Moen

10% “Other” Price Premium 5% “Other” Price Premium

Simulator Output: competitor response and “Other Brand” 5% price decrease (from 10%)

22

Simulator Output: competitor response and “Other Brand” at 0-10% price premium

“Other Brand” Percent Price Premium over Standard Brass - Delta fixed at 5% - Moen fixed at 0%

Per

cen

t sh

are

of

sale

s

TIP: Tested price points should bracket range under consideration. Interpolation

more valid than extrapolation.

23

Types of Conjoint Exercises

• Ratings• Discrete choice• Rankings• Constant sum • Volumetric

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Example New Home Rating Conjoint (ca 2001)

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Ranking combines strengths of discrete choice and ratings

“Discrete” 1st choice

2nd-6th choices provide additional data

But strength of preference not always clear and ranking might not seem realistic

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CONSTANT SUM: 5 10 30 10 35 10

VOLUMETRIC ALLOCATION: 0 10 20 0 20 0Of the 50 faucets you plan to buy, indicate how many of each type you would

purchase. Total must sum to 50

Allocate 100 points across the offerings to indicate your likelihood to purchase each, the more points the higher likelihood. Total must sum to 100.

Constant Sum and Volumetric Allocation both distribute fixed sums (per respondent) across offerings

• Constant sum allocates “points” or probabilities to gather data on all offerings while forcing a trade-off

• Volumetric asks, “how many of each would you purchase?”

• Volumetric is required for any frequent or multiple purchase situations, e.g.: Multiple units or volumes of products (trucks, gallons of paint, parts…) Frequent purchase occasions (visits to stores, delivery services, etc.)

Tip: In the faucet project, we used rankings for consumers who typically buy only one faucet and volumetric for plumbers and channels

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Type Pros Cons

Ratings Captures data on each rating

Can result in ties, flat ratings, truncated scaling

Discrete choice Simple, intuitive, forces a choice

Thin input data; may overestimate adoption

Rankings Maximizes discrimination while capturing data on each

offering

Can be difficult to rank all choices; interval among

rankings uncertain

Constant sum Captures data on all offerings, can produce

interval results

Can be tedious/time consuming for respondents; less realistic

Volumetric Highly realistic, captures data on all offerings,

essential for multi-purchase situations

Not appropriate for single or infrequent purchases

Summary: Types of Conjoint Exercises

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Conjoint Alternative: Max Diff

Spanish/English bilingual staff"No questions asked" return policyLow-cost product protection plans

Follows-up on project statusSpecial check-out line for contractors

Truck rental availableOn-line information on order status

Expedited special ordersExpedited shipping available

Carries newest/latest productsCaters to female shoppers

Carries all leading brandsCarries lower priced house-brandsOne-stop-shopping for all projects

Caters to the DIYerCaters to contractors

Helps homeowner plan projects

Home delivery availableShip to store available

Frequent shopper rewards"How do build/fix/do it" classesQR code info for all merchandise

on-line chat consultation

Short wait in lineBroad brand assortment

Carries only premium brands Offers contractor discounts

Store staff expertiseProvides installation services

Lowest Prices

Least Likely Most Likely

Short wait in lineBroad brand assortment

Carries only premium brands

Lowest Prices

Least Likely Most Likely

Offers contractor discountsStore staff expertise

Provides installation services

Carries only premium brands

Least Likely Most Likely Frequent shopper rewards

Provides installation servicesHome delivery availableShip to store available

• Determines relative importance (rank ordering) of attributes via repeated subset trade-offs

• Works best with long lists of binary (yes/no, present/absent) attributes

• Answers questions like “what are top 5 drivers of shopping here?”

• Not appropriate for product configuration or pricing

Of these four features, which is least likely and most likely to get you to shop at a hardware store or home center?

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Attribute Brand 1 Brand 2 Brand 3 Brand 4 Brand 5 Brand 6

Product Variety Good Good Good Good Better GoodProduct Quality Better Better Good Good Better GoodOrdering, Shipping and Delivery Best Best Good Best Better BestWebsite and Sales Support Better Better Good Best Better BestWarranty/Product Support Best Best Good Best Better BestPrice $ $$ $$$ $$ $ $$% of purchases

Hybrid Conjoint: “Nested” example

Requirements Identification &

Provider Performance Ratings

Constant Sum

Volumetric Conjoint

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Baseline ScenarioWarrantyLength of coverage Transferrable lifetime warranty 1% Limited lifetime warranty 3% 10-20 year warranty 8% 3-5 year warranty 9% 1 year warranty 36% 90 day warranty 10% No warranty 1% None of the above 0% Don't know 31%Total 100%Quick resolution on warranty claims 67%Availability of replacement product if damaged during installation or defective 72%Overall ease of resolving warranty claims 44%

WarrantyLength of coverage Transferrable lifetime warranty 0% Limited lifetime warranty 75% 10-20 year warranty 0% 3-5 year warranty 0% 1 year warranty 0% 90 day warranty 0% No warranty 0% None of the above 0% Don't know 25%Total 100%Quick resolution on warranty claims 75%Availability of replacement product if damaged during installation or defective 75%Overall ease of resolving warranty claims 75%

Baseline Scenario Change % Change

Service Provider 20.0% 20.5% 0.5% 2.5%

Competition 80.0% 79.5% -0.5% -0.6%

TOTAL MARKET 100% 100%

TOTAL MARKET VIEW

Modeled Scenario

Baseline Scenario Change % Change

Service Provider 20.0% 20.0% 0.0% 0.0%

Competition 80.0% 80.0% 0.0% 0.0%

TOTAL MARKET 100% 100%

TOTAL MARKET VIEW

Hybrid Conjoint Simulator

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Product Mix Website Sales Support Order Processing Shipping and Delivery“Green” product offerings Navigational tools Available catalogs and brochures Order entry options Lead time on standard shipment On time deliveries Products made from sustainable, reusable or recycled materials

Tool bar or menu organized by product sub-category

Comprehensive catalogs and price books Printed order form/fax order option Product is delivered within 24 hours 99% or more deliveries are on time

Products made without harmful chemicals Search bar for locating products by keyword, item number or SKU

Accessible field sales representatives Phone order option Product is delivered in 2-3 days About 90% of deliveries are on time (9 out of 10)

Products that conserve water No more than 3 clicks to find what you're looking for

Prompt resolution from field sales representatives

Online or e-mail order option Product is delivered in 4-7 days About 75% of deliveries are on time (3 out of 4)

Products that are energy efficient or help conserve energy

Downloadable materials Ongoing product training EDI system Product is delivered in 1-2 weeks 50% or fewer deliveries are on time

Products contained in “green” packaging that is designed to reduce waste

PDF catalogs/brochures Quality relationships with field sales representatives

Type of order confirmation Product is delivered in 3-4 weeks Not applicable

Breadth of products and services PDF users manuals/guidebooks Product displays that you can “touch and feel” Fax/printed order confirmation Product is delivered in 5-7 weeks Total

Product offerings meet my needs Service provider contact information Manufacturer treats relationship as business partnership

Online order confirmation Product is delivered in 8 weeks or more Direct ship to job site

Variety of options within one type of product Detailed product information Courteous/professional field sales representatives

Timely order confirmation Not Applicable Low shipping cost

Variety of price points available (e.g. good, better, best)

Overall ease of navigation Quality of product information Order confirmation received instantly Total Shipments not damaged

Ease of installation Warranty Overall availability of product information Order confirmation received same day Order completion rate 99% or more shipments are not damaged

Building science expertise Length of coverage Product Quality Order confirmation received within 48 hours

99% or more orders are complete About 90% of shipments are not damaged (9 out of 10)

Cleanliness of work area post-installation Transferrable lifetime warranty Appearance No order confirmation provided About 90% of orders are complete (9 out of 10)

About 75% of shipments are not damaged (3 out of 4)

Consistency of installation quality Limited lifetime warranty Consistency of quality Not applicable About 75% of orders are complete (3 out of 4)

50% or fewer shipments are not damaged

Follow-up service completed in a timely manner 10-20 year warranty Durability Total 50% or fewer orders are complete Not applicableInstallation completed when promised 3-5 year warranty Dimensional consistency Accurate order confirmation Not applicable TotalWell-trained installers 1 year warranty Attention to detail 99% or more orders are accurate Total Customer ServiceMeeting contract/insurance requirements 90 day warranty About 90% of orders are accurate (9 out of

10)Accuracy of shipments Calls to representatives are

returned in a timely fashionPost-installation walk-throughs completed in a timely manner

No warranty About 75% of orders are accurate (3 out of 4)

99% or more shipments are accurate One point of contact

Quality of installations None of the above 50% or fewer orders are accurate About 90% of shipments are accurate (9 out of 10)

Product and service concerns are handled in a timely fashion

Responsiveness to project schedule Don't know Don't know About 75% of shipments are accurate (3 out of 4)

Representative is available to satisfy your needs

Success in passing inspections Total Total 50% or fewer shipments are accurate Representative is helpful in satisfying your needs

Timeliness of installations Quick resolution on warranty claims Online order tracking Not applicable Representative is knowledgeable about products

Availability of replacement product if damaged during installation or defective

Streamlined ordering and billing procedures Total Representative is knowledgeable about processes

Overall ease of resolving warranty claims Overall ease of order process Satisfactory billing practices

Complete hybrid model: Over 100 testable features in 9 product/service touch-points

Example Modeled

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“What if” brand performance was

significantly improved?

“What if” brand performance was

significantly improved?

Share change as result of Service Level improvement

Share change as result of Service Level improvement

Hybrid Conjoint Simulator used to prioritize strategic service-level improvements (shipping category, ca 2002)

BASELINE

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Full profile vs. Adaptive Conjoint

• Full profile shows all attributes and all levels of each attribute

However, every respondent sees a subset of combinations

• Adaptive shows partial profile, often based on preliminary screening

Ostensibly can handle more attributes

But concern is that attributes initially “dismissed” as unimportant might be evaluated differently in a full-profile

And a hybrid might be a better alternative if the attributes are “nested”

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Types of Conjoint Exercises – Other Considerations

• Branded vs. un-branded Single or multiple-offerings per brand

• Ability to back in-out brands or products New brands, co-branding

Entirely new products

Retiring brands or products

New/old brand or product co-existence

TIP: Decide up front if you will need to back specific brands or offerings in and out. They should “appear and disappear” in the choice

sets respondents actually see.

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TRUCKCaterpillar All 'WHITE' cells in the grid below can be modified by the user. Legal values range from -$3,000 to $3,000. Type "N/A" in the cell for any Truck/Engine combination that you'd like to exclude from your scenario.

Price Adjustment 0 n/a N/A N/A N/A620-OH C13 $106,500 ISX 12L DD 13 MX MB/Hino/Komatsu

C15 $108,000 ISX 15L DD 15720-OH C13 $106,500 ISX 12L DD 13 MX MB/Hino/Komatsu

C15 $108,000 ISX 15L DD 15715-OH C13 $106,500 ISX 12L DD 13 MX MB/Hino/Komatsu

C15 $108,000 ISX 15L DD 15

FreightlinerPrice Adjustment N/A N/A 0 N/A N/ACascadia C13 ISX 15L DD 13 $100,000 MX MB/Hino/Komatsu

C15 DD 15 $101,000Century Class C13 ISX 15L DD 13 $100,000 MX MB/Hino/Komatsu

C15 DD 15 $101,000Classic 112/120 C13 ISX 15L DD 13 $101,500 MX MB/Hino/Komatsu

C15 DD 15 $102,500Columbia 112/120 C13 ISX 15L DD 13 $102,000 MX MB/Hino/Komatsu

C15 DD 15 $103,000FLD 120 C13 ISX 15L DD 13 $100,000 MX MB/Hino/Komatsu

C15 DD 15 $101,000M2112 C13 ISX 12L DD 13 $100,000 MX MB/Hino/Komatsu

InternationalPrice Adjustment 0 0 N/A N/A 0 N/APaystar 5000 Series C13 $100,000 ISX 15L $102,000 DD 13 MX MaxxForce 11 $100,000 MB/Hino/Komatsu

C15 $101,500 ISX 16L $102,000 DD 15 MaxxForce 13 $100,000MaxxForce 15 $101,000

6000C C15 $106,500 ISX 15L $107,000 DD 13 MX MaxxForce 13 $105,000 MB/Hino/KomatsuISX 16L $107,000 DD 15 MaxxForce 15 $106,000

Workstar 7000 Series DD 13 MX MaxxForce 11 $100,000 MB/Hino/KomatsuMaxxForce 13 $100,000

9900 C15 $104,000 ISX 15L $104,500 DD 13 MX MaxxForce 13 $102,500 MB/Hino/KomatsuISX 16L $104,500 DD 15 MaxxForce 15 $103,500

Prostar C13 $100,000 ISX $102,000 DD 13 MX MaxxForce 11 $100,000 MB/Hino/KomatsuC15 $101,500 DD 15 MaxxForce 13 $100,000

MaxxForce 15 $101,000

KenworthPrice Adjustment N/A 0 N/A 0 N/AT660 C13 ISM $101,000 DD 13 MX $101,000 MB/Hino/Komatsu

C15 ISX $102,000 DD 15T800 C13 ISX 12L $101,000 DD 13 MX $100,000 MB/Hino/Komatsu

C15 ISX 15L $101,000 DD 15ISX 16L $101,000

W900 C13 ISX 12L $106,500 DD 13 MX $105,500 MB/Hino/KomatsuC15 ISX 15L $106,500 DD 15

ISX 16L $106,500

MackPrice Adjustment N/A N/A N/A N/A 0 N/AGranite C13 ISX 15L DD 13 MX MP7 $100,000 MB/Hino/Komatsu

MP8 $100,000Pinnacle C13 ISX 15L DD 13 MX MP7 $100,000 MB/Hino/Komatsu

MP8 $100,000

PeterbiltPrice Adjustment N/A 0 N/A 0 N/A365 C13 ISX 12L $101,000 DD 13 MX $100,000 MB/Hino/Komatsu

367 C13 ISX 12L $101,000 DD 13 MX $100,000 MB/Hino/KomatsuC15 ISX 15L $101,000 DD 15

ISX 16L $101,000386/387 C13 ISM $101,000 DD 13 MX $101,000 MB/Hino/Komatsu

C15 ISX $102,000 DD15388/389 C13 ISX 12L $107,500 DD 13 MX $106,500 MB/Hino/Komatsu

C15 ISX 15L $107,500 DD 15ISX 16L $107,500

SterlingPrice Adjustment N/A N/A $0 N/A N/AA-Line/L-Line C13 ISX 12L DD 13 $100,000 MX MB/Hino/Komatsu

C15 ISX 15L DD 15 $101,000

VolvoPrice Adjustment N/A N/A N/A N/A 0 N/AVNL64 C13 ISX 15L DD 13 MX VE-D13 $102,000 MB/Hino/Komatsu

C15 ISX 16L DD 15 VE-D16 $103,000VT880 C15 ISX 16L DD 15 MX VE-D16 $104,000 MB/Hino/Komatsu

Western StarPrice Adjustment N/A N/A 0 N/A N/A4900 C13 ISX 12L DD 13 $103,000 MX MB/Hino/Komatsu

C15 ISX 15L DD 15 $104,000

Dummy TruckPrice Adjustment N/A N/A N/A N/A N/ADummy C13 ISX 12L DD 13 MX MB/Hino/Komatsu

C15 ISX 15L DD 15ISX 16L

Detroit Diesel Engine International Engine

To save an input scenario, press Ctrl-Shift-S. You will be asked for a name and a folder to save to.To load a scenario you created earlier, press Ctrl-Shift-L.

All 'WHITE' cells in the grid below can be modified by the user. Legal values range from -$3,000 to $3,000. Type "N/A" in the cell for any Truck/Engine combination that you'd like to exclude from your scenario.

Mack Engine Volvo Engine Dummy EngineENGINE

Paccar EngineCaterpillar Engine Cummins Engine

TRUCKCaterpillar All 'WHITE' cells in the grid below can be modified by the user. Legal values range from -$3,000 to $3,000. Type "N/A" in the cell for any Truck/Engine combination that you'd like to exclude from your scenario.

Price Adjustment 0 n/a N/A N/A620-OH C13 $106,500 ISX 12L DD 13 MX

C15 $108,000 ISX 15L DD 15720-OH C13 $106,500 ISX 12L DD 13 MX

C15 $108,000 ISX 15L DD 15715-OH C13 $106,500 ISX 12L DD 13 MX

C15 $108,000 ISX 15L DD 15

FreightlinerPrice Adjustment N/A N/A 0 N/ACascadia C13 ISX 15L DD 13 $100,000 MX

C15 DD 15 $101,000Century Class C13 ISX 15L DD 13 $100,000 MX

C15 DD 15 $101,000Classic 112/120 C13 ISX 15L DD 13 $101,500 MX

C15 DD 15 $102,500Columbia 112/120 C13 ISX 15L DD 13 $102,000 MX

C15 DD 15 $103,000FLD 120 C13 ISX 15L DD 13 $100,000 MX

C15 DD 15 $101,000M2112 C13 ISX 12L DD 13 $100,000 MX

InternationalPrice Adjustment 0 0 N/A N/APaystar 5000 Series C13 $100,000 ISX 15L $102,000 DD 13 MX

C15 $101,500 ISX 16L $102,000 DD 15

6000C C15 $106,500 ISX 15L $107,000 DD 13 MXISX 16L $107,000 DD 15

Workstar 7000 Series DD 13 MX

9900 C15 $104,000 ISX 15L $104,500 DD 13 MXISX 16L $104,500 DD 15

Prostar C13 $100,000 ISX $102,000 DD 13 MXC15 $101,500 DD 15

Detroit Diesel Engine Paccar EngineCaterpillar Engine Cummins Engine

Example truck JV “super-simulator” (ca 2007):•Multi-products per brand•Cross-branded offerings•Product back in-out•Brand back in-out

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A few final tips:

• Keep trade-off exercise realistic and manageable Sufficient but not excessive number of attributes and options

No illogical combinations if some attributes depend on others

Keep pricing consistent with offerings on same screen

• Baseline and calibration are critical for forecasts Baseline configurations and shares should be empirically based

Simulator sensitivity often in need of adjustment

Proper data weighting critical to gauge movement off of baseline

• Purchase timing can be indeterminate unless built-in Can specify purchase period – e.g., “within next 12 months”

Can adjust forecasts based on actual incidence of purchases, cycles

• Conjoint assumes “perfect market awareness” Therefore, simulations often over-estimate actual uptake

Back-end adjustments often required

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What have we learned?

• What is conjoint?

• What does conjoint help us do?

• What are the various conjoint approaches?

• How can we use conjoint to predict purchase behavior?

George H. Leon, Ph.D. Senior Vice President [email protected]: 215.496.6892

Documents

Conjoint Models – Powerful Tools to Maximize Sales