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 1 16 Mb 7 5 3 24 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 2.3 16 Mb 7 5 3 15/3 5.0 24 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.
Conjoint Analysis Input: Salsa Example Figure 7-2
Figure 7-3 Conjoint Analysis: Graphical Output Thickness Spiciness Color 2 1 0 -1 -2 UTILITY Regular Thick Ex-Thick Mild Medium-Hot Ex-Hot Red Green 0.161 0.913 -1.074 1.667 0.105 -1.774 -0.161 0.161
Figure 7-3 (cont’d.) Conjoint Analysis:Relative Importance of Attributes 0 20 40 60 80 100 % Spiciness Thickness Color 59.8% 34.6% 5.6%
Some Qualitative Attribute Analysis Techniques • Dimensional Analysis • Checklists • Relationships Analysis • There are many others.
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 A Dimensional Attribute List
Figure 7-5 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?
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
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 Some Creative Stimuli Words
Designing Courtyard by Marriott • Problem for Marriott • Early 1980s: • Running out of good sites for typical full service Marriott • Hotels (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: G building shape G landscape design G pool type and location G hotel size 2. Rooms: G room size & decor G type of heating & cooling G location/type of bathroom 3. Food-related services: G type/location of restaurant G room service G vending services/stores G in-room kitchen 4. Lounge facilities: G location G atmosphere G type of people (clientele)
Optimal Hotel Design Features cont’d 5. Services:G reservations G registration/checkout G limo to airport G bellman G message center G secretarial service G car rental G maintenance 6. Leisure facilities:G sauna G exercise room G racquetball courts G tennis courts G game room G children’s playroom & yard 7. Security factors:G security guards G smoke detectors G 24 hour video
Overall Study Design and Analysis Is the concept viable Self-explicated evaluation Simulation Guidelines for product design, positioning and advertising What is the best competitive position? Hybrid conjoint analysis and simulation Multifact evaluation of complete offering Cross- validation What pricing strategy to follow? ELASTICON Price/demand response Pricing recommendation What type of location to select? Attitude and preference scaling Preference for location types Recommendation for type of location What combination of features and services? Supplementary tasks and background data Management Question Model Respondents’ Tasks Additional Modeling and Validation Output Cross- validation Additional guidelines for segmentation, positioning and product design
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 shapeEnclosed access/unrestricted view/ Outdoor courtyard Free form shape balcony or window Landscaping Indoor/Outdoor Hotel size Minimal Pool locationSmall (125 rooms, 2 stories) Moderate In courtyardLarge (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 separateLarge 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/ NoneNew 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 FoodRestaurant 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 LoungeType 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 Noneplayground NoneYes None Yes Tennis courts Playground only Whirlpool/Jacuzzi None Playroom only None Yes Playground and playroom Outdoor Game room/Entertainment Pool extras IndoorNoneNone 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. hotelLobby/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 NoneManagement skill None Call hotel directlyYes Budget motel level Information on 800 reservation number Bellman Holiday Inn level restaurants, theaters, etc. Check-in NoneNon-convention Hyatt Arrangements and StandardYes levelreservations 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 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. • Building Size, Bar/Lounge • Large (600 rooms) 12-storey hotel with: • quiet bar/lounge, • enclosed central corridors & elevators, and • all rooms have very large windows • Landscaping/Court • Building forms a spacious outdoor courtyard: • many trees & shrubs, • the swimming pool plus a fountain, and • terraced areas for sunning, sitting & eating. • Food • Small, 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 Quality • Quality of room furnishings, carpet, etc., is similar to: • Hyatt Regencies, and • Westin “Plaza” Hotels. • Room Size & Function • Room 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 Standards • Full 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 o almost all the time o on a regular basis o now and then o stay there o stay there
Result “Courtyard by Marriott” not “small Marriott”