Conjoint research is a pricing model that provides a simulation of shopping scenarios subject to product characteristics and evaluation criteria.
It is a statistical model based on the relative importance which people attach to certain product characteristics.
A general conjoint construction is created as follows:
- Consumers choose a product from among shopping scenarios constructed as different options, and thereby specify their preferences.
- The purchasing scenario is constructed to reflect a real purchasing situation which involves also the “none” option and to encourage the respondent to evaluate various elements, such as price, brand, package.
- After each selection, different product sets comprising different combinations of each characteristic are offered to therespondent. Thus;
- Products are tested in a competitive market.
- Different products are shown for each selection situation.
- The price of a product range can be increased or decreased.
This cycle is repeated for a number of times subject to the number of product characteristics and evaluation levels.
- Shopping scenarios change in each selection.
- The attention of each consumer is drawn to all characteristics equally and thereby price perception is shown to all respondents on a fair level.
At the reporting stage, the data obtained provide brand preference scores (SOP) of the consumers.
The results achieved are combined with real market data, and market shares of brands can be established at different price levels, and “price elasticity” worked out over the price levels that we use. Therefore, it becomes easier to estimate what market share will the brands will get and at which price level in the market.