New Products Management
Chapter 7
Analytical Attribute Approaches:
Trade-Off Analysis and Qualitative Techniques
Trade-Off (Conjoint) Analysis
• Put the determinant attributes together in combinations or sets.
• Respondents rank these sets in order of preference.
• Conjoint analysis finds the optimal levels of each attribute.
What is Conjoint Analysis?
A way to incorporate the structure of customer preferences into the new product design process. It helps evaluate how customers make tradeoffs between various product attributes (a decompositional approach).
The basic outputs of conjoint analysis are:
A numerical assessment of the relative importance each customers attaches to attributes of a product set.
The value (utility) provided to each customer by each attribute option.
Use of Conjoint Analysis
Designing new products that enhance consumer utility.
Forecasting sales/market share of alternative product concepts.
Identifying market segments for which a given concept has high value.
Identifying the “best” concept for a target segment.
Pricing products/product bundles.
Product line management.
Positioning new products to different segments.
Product Design: Conjoint Analysis
The approach derives customers’ utility values for attributes and attribute options based on customers’ stated overall preferences for different bundles of attributes. The following example shows Memory and Price bundles.
PriceMemory $1,000 $1,500 $2,000
8 Mb 4 2 116 Mb 7 5 324 Mb 9 8 6
9 = Most preferred•••
1 = Least preferred
Simplified Part-Worth(Utility) Calculation
Price Part- Memory $1,000 $1,500 $2,000 Worth
8 Mb 4 2 1 7/3 2.316 Mb 7 5 3 15/3 5.024 Mb 9 8 6 23/3 7.7
20/3 15/3 10/3
Part-Worth: 6.7 5.0 3.3
9 = Most preferred•••
1 = Least preferred
How to Use inDesign/Tradeoff Evaluation
Example: 24 Mb vs 16 Mb = 7.7 – 5.0 = 2.7 units
$1,000 vs $1,500 = 6.7 – 5.0 = 1.7 units
So: 8 Mb is worth more than $500 to this customer.
2.7 ( ––– (1,500 – 1,000) $795)
1.7
Can use to assess value to customer of non-product (service) attributes.
Thickness Spiciness Color Actual Ranking*
Ranking as Estimated by Model
Regular Mild Red 4 4 Regular Mild Green 3 3 Regular Medium-Hot Red 10 10 Regular Medium-Hot Green 6 8 Regular Extra-Hot Red 15 16 Regular Extra-Hot Green 16 15 Thick Mild Red 2 2 Thick Mild Green 1 1 Thick Medium-Hot Red 8 6 Thick Medium-Hot Green 5 5 Thick Extra-Hot Red 13 13 Thick Extra-Hot Green 11 11 Extra-Thick Mild Red 7 7 Extra-Thick Mild Green 9 9 Extra-Thick Medium-Hot Red 14 14 Extra-Thick Medium-Hot Green 12 12 Extra-Thick Extra-Hot Red 17 18 Extra-Thick Extra-Hot Green 18 17
* 1 = most preferred, 18 = least preferred.
Conjoint Analysis Input: Salsa Example
Figure 7-2
Regular Thick Ex-Thick
UT
ILIT
Y
2
1
0
-1
-2
Mild Medium-Hot Ex-Hot Red Green
Thickness Spiciness Color
0.161 0.913 -1.074 1.667 0.105 -1.774 -0.161 0.161
Conjoint Analysis:Graphical Output
Figure 7-3
Conjoint Analysis:Relative Importance of Attributes
0 20 40 60 80 100 %
Spiciness
Thickness
Color
59.8%
34.6%
5.6%
Figure 7-3(cont’d.)
Some Qualitative Attribute Analysis Techniques
• Dimensional Analysis
• Checklists
• Relationships Analysis– There are many others.
A Dimensional Attribute List• Weight
• Rust resistance
• Length
• Color
• Water resistance
• Materials
• Style
• Durability
• Shock resistance
• Heat tolerance
• Explosiveness
• Flammability
• Aroma
• Translucence
• Buoyancy
• Hangability
• Rechargeability
• Flexibility
• Malleability
• Compressibility
Figure 7-4
An Idea Stimulator Checklist• Can the dimensions be changed? (larger, smaller, longer, shorter,
thicker...)
• Can the quantity be changed? (more, less, combine, fractionate...)
• Can the order be changed?
• Can the time element be changed?
• Can the cause or effect be changed?
• Can there be a change in character? • Can the form be changed? (animated, speeded, slowed, attracted...)
• Can the state or condition be changed?
• Can the use be adapted to a new market?
Figure 7-5
Relationships Analysis• Force combinations of dimensions (features, functions, and
benefits) together.
• Techniques:
– Two-dimensional matrix
– Multidimensional (morphological) matrix
• Household cleaning products example used six dimensions:
– Instrument used, ingredients used, objects cleaned, type of container, substances removed, texture or form of cleaner
Other Methods: Lateral Search Techniques
• Free association
• Stereotype activity
• Lateral thinking -- avoidance
• Creative stimuli words
• Studying “big winners”
• Use of the ridiculous
• Forced relationships
Some Creative Stimuli Words• Guest stars
• Alphabet
• Truth
• Outer space
• Charity
• His and hers
• Style
• Nation
• Family
• Videotape
• Photography
• Testimonials
• Decorate
• Fantasy
• Hobbies
• Holidays
• Weather
• Calendar
• Push button
• Snob appeal
Designing Courtyard by Marriott
Problem for Marriott
Early 1980s:Running out of good sites for typical full service MarriottHotels (missing low-end business traveller segment).
Idea:New chain for low-end business and/or pleasure travellers. Business travellers? (6+ trips/mid-week). Pleasure travellers? (2+ trips/stay in hotels/motels).
Hotel Chain should: Offer good value for the money. Have minimal cannibalization of Marriott’s other facilities. Have market position with competitive advantage.
Overall Study Design
50 attributes, 2–8 levels/attributes.
Hybrid conjoint task.
Price elasticity, using ELASTICON model.
Positioning analysis: scaling, clustering to deal with demographics, attitudes and hotel usage.
263 mid-week business travellers,83 high-end business travellers,255 non-business travellers
in Atlanta, Dallas, San Francisco, Chicago.
Optimal Hotel Design Features
1. External factors: building shape
landscape design
pool type and location
hotel size
2. Rooms: room size & decor
type of heating & cooling
location/type of bathroom
3. Food-related services: type/location of restaurant
room service
vending services/stores
in-room kitchen
4. Lounge facilities: location
atmosphere
type of people (clientele)
Optimal Hotel Design Features cont’d
5. Services: reservations registration/checkout limo to airport bellman message center secretarial service car rental maintenance
6. Leisure facilities: sauna exercise room racquetball courts tennis courts game room children’s playroom &
yard
7. Security factors: security guards smoke detectors 24 hour video
What combinationof features
and services?
Supplementarytasks and
background data
What type of location
to select?
Attitude andpreference
scaling
Preference for location
types
Recommendationfor type oflocation
What pricing strategy
to follow?
ELASTICON
Price/demandresponse
Pricing recommendation
What is the best competitive
position?
Hybrid conjoint analysisand simulation
Multifact evaluation of
complete offering
Cross-validation
Is the conceptviable
Self-explicatedevaluation
Simulation
Guidelines for product design,
positioningand advertising
Overall Study Design and Analysis
Management Question
Model
Respondents’Tasks
Additional Modeling and
Validation
Output
Additionalguidelines forsegmentation,
positioning andproduct design
Cross-validation
50 Factors and 167 Levelsthat Describe Hotel Features
External Factors Pool type Corridor view
Building shape No pool Outside access/restricted view
L-shaped w/landscape Rectangular shape Enclosed access/unrestricted view/
Outdoor courtyard Free form shape balcony or window
Landscaping Indoor/Outdoor Hotel size
Minimal Pool location Small (125 rooms, 2 stories)
Moderate In courtyard Large (600 rooms, 12 stories)
Elaborate Not in courtyard
Rooms Size Sink location Bathroom features
Entertainment Small (standard) In bath only None
Color TV Slightly larger (1 foot) In separate area Shower Massage
Color TV w/movies at $5 Much larger (2.5 feet) In bath and separate Whirlpool (Jacuzzi)
Color TV w/30 channel Small suite (2 rooms) Size of bath Steam bath
cable Large suite (2 rooms) Standard bath Amenities
Color TV w/HBO, Quality of Decor Slightly larger/sink Small bar soap
movies, etc. Budget motel decor separate Large soap/shampoo/
Color TV w/free movies Old Holiday Inn decor Much larger bath w/ shoeshine
Entertainment/Rental in room New Holiday Inn decor larger tub Large soap/bath gel/
None New Hilton decor Very large/tub for 2 shower cap/sewing kit
Rental Cassettes/Atari New Hyatt decor Heating and Cooling Above items + toothpaste,
Rental Cassettes/Stereo Wall unit/full control
Rental Movies/Betamax Wall unit/soundproof/full control
Central H or C (seasonal)
Central H or C/full control
50 Factors and 167 Levelsthat Describe Hotel Features
Food Restaurant nearby Store Vending
Restaurant in hotel None No food in store None
None (coffee shop next Coffee shop Snack items Soft drink machine only
door) Fast food Snacks, refrigerated Soft drink and snack
Restaurant/lounge combo, Fast food or coffee shop items, wine, beer, machines
limited menu and moderate restaurant liquor Soft drink, snack, and
Coffee shop, full menu Fast food or coffee shop Above items and sandwich machines
Full-service restaurant, and good restaurant gourmet food items Above and microwave
full menu Room Service In-room kitchen facilities available
Coffee shop, full menu None None
and good restaurant Phone-in order/guest to Coffee maker only
Free continental pick up Coffee maker and
None Room service, limited menu refrigerator
Continental included in Room service, full menu Cooking facilities in room
in room rate
Lounge Type of people Lounge nearby
Atmosphere Hotel guests and friends None
Quiet bar/lounge only Lounge/bar nearby
Lively, popular bar/ Open to public— Lounge/bar w/
lounge general appeal entertainment nearby
Open to public -
many singles
50 Factors and 167 Levelsthat Describe Hotel Features
Leisure Racquet ball courts Children’s playroom/
Sauna None playground
None Yes None
Yes Tennis courts Playground only
Whirlpool/Jacuzzi None Playroom only
None Yes Playground and playroom
Outdoor Game room/Entertainment Pool extras
Indoor None None
Exercise room Electric games/pinball Pool w/slide
None Electric games/pinball/ Pool w/slides and
Basic facility w/weights Ping-Pong equipment
Facility w/Nautilus Above + movie theater, Pool w/slides, waterfall,
equipment bowling equipment
Security Smoke detector Sprinkler system
Security guard None None
None In rooms and throughout Lobby and hallways only
11 a.m. to 7 p.m. hotel Lobby/hallways/rooms
7 p.m. to 7 a.m. Alarm button 24-hours video cameras
24 hours None None
Button in room Parking/hallway/rooms
50 Factors and 167 Levelsthat Describe Hotel Features
ServicesLimo to airport Cleanliness/upkeep Special Services
Reservations None Management skill None
Call hotel directly Yes Budget motel level Information on
800 reservation number Bellman Holiday Inn level restaurants, theaters, etc.
Check-in None Non-convention Hyatt Arrangements and
Standard Yes level reservations
Pre-credit clearance Message service Convention Hyatt level Travel problem
Machine in lobby Note at front desk Fine hotel level resolution
Check out Light on phone Laundry/Valet Car maintenance
At front desk Light on phone and None None
Bill under door/leave key message under door Client drop off and Take car to service
Key to front desk/bill by Recorded message pick up Gas on premises/bill to
mail Secretarial services Valet pick up and drop room
Machine in lobby None off Car rental/Airline reservations
Xerox machine Self service None
Xerox machine and typist Car rental facility
Airline reservations
Car rental and airline
reservations
Room Price per Night is $44.85
Building Size, Bar/LoungeLarge (600 rooms) 12-storey hotel with:
quiet bar/lounge, enclosed central corridors & elevators, and all rooms have very large windows
Landscaping/CourtBuilding forms a spacious outdoor courtyard:
many trees & shrubs, the swimming pool plus a fountain, and terraced areas for sunning, sitting & eating.
FoodSmall, moderately priced lounge and restaurant for hotel guests/friends:
limited breakfast with juices, fruit, Danish, cereal, bacon & eggs,
lunch: soup & sandwiches only, and evening meal: salad, soup, sandwiches, six hot
entrees including steak.
Hotel/Motel Room QualityQuality of room furnishings, carpet, etc., is similar to:
Hyatt Regencies, and Westin “Plaza” Hotels.
Room Size & FunctionRoom 1 foot longer than typical hote;motel room:
space for comfortable sofa-bed & 2 chairs, large desk & coffee table, and coffee maker & small refrigerator.
Service StandardsFull service including:
rapid check-in/check-out systems, reliable message service, valet (laundry pick-up/delivery), bellman, someone (concierge) arranges reservations,
tickets, generally at no cost, and cleanliness, up-keep, management similar to
Hyatts & Marriotts .
Leisure Combination indoor-outdoor pool, enclosed whirlpool (Jacuzzi), and well-equipped playroom/playground for kids.
Security Night guard on duty 7 pm to 7 am, fire/water sprinklers throughout hotel, and all rooms have very large windows.
Would stay there Would stay there Would stay there Would rarely Would not almost all the time on a regular basis now and then stay there stay there
This full profile description of a hotel offering is one of the 50 cards developed by a fractional factorial design of the seven facets each at the five levels (developed by the Marriott’s development team). Each rpondent received five cards following a block design.