| Brand | Part−Worth | Price | Part−Worth |
|---|
| Toyota Corolla | 1.9 | $54,000 | 0.8 |
|---|
| Honda City | 0.4 | $58,000 | 0.3 |
|---|
| Nissan Sunny | 0.9 | $62,000 | 0.1 |
|---|
| Mitsubishi Lancer | -0.6 | $66,000 | -0.5 |
|---|
| Hyundai Avante | -2.6 | $70,000 | -0.7 |
|---|
Exhibit 16.8 Part-worth for brand and price levels for a
respondent.
| Brand | Price | Utility | Part−Worth Brand | Part−Worth Price |
|---|
| Toyota Corolla | $70,000 | 1.2 | 1.9 | -0.7 |
|---|
| Honda City | $58,000 | 0.7 | 0.4 | 0.3 |
|---|
| Nissan Sunny | $54,000 | 1.7 | 0.9 | 0.8 |
|---|
| Mitsubishi Lancer | $66,000 | -1.1 | -0.6 | -0.5 |
|---|
| Hyundai Avante | $54,000 | -1.8 | -2.6 | 0.8 |
|---|
Exhibit 16.9 Product utility computed for the above brand/price
options, for the respondent in Exhibit 16.8.
Utility
is central to the theory of conjoint analysis. It reflects
how desirable or valuable an object is in the mind of the respondent and is
assessed from the value (part-worth) of its parts. Conjoint analysis examines respondents’
choices or ratings/rankings of products, to estimate the part-worth of the
various levels of each attribute of a product.
When used in the context of pricing research,
conjoint analysis focusses mainly on two attributes — brand and price. The
part-worth for all brand and price levels is computed, for each respondent,
using the methodology covered under Conjoint Analysis in
Chapter Product Design. In the
example shown in Exhibit 16.8, based on their choices, this respondent
values the Toyota Corolla brand more than the Nissan Sunny and the Nissan Sunny
more than Honda City and so on.
To determine what the respondent would select from the choices presented in
Exhibit 16.9, the bundled brand/price utility is computed
by adding the part-worth of brand and price for each of the five options. In this case, the
choice would be Nissan Sunny $54,000, because its utility is higher than that for the other
four options.
Choices for individual respondents across the
study’s price range are aggregated and weighted to yield the consumers’ share
of preferences over the price range. This yields the demand price relationships
for the brands, which may be used to estimate price elasticity and cross price
elasticity of demand at the price points of interest to the marketer.
