How to Use Conjoint and MaxDiff to Put Your Best Product Forward

1. Survey Analytics Webinar December 4th, 2013 Wednesday, December 4, 13

2. “HI FOLKS!” Esther LaVielle VP of Client Services Wednesday, December 4, 13 Agenda ...

3. “HI FOLKS!” Esther LaVielle VP of Client Services Agenda ... 4 Years with Survey Analytics 7 Years Market Research Experience Qualitative & Quantitive “When I’m not working and assisting clients with conjoint analysis projects, I enjoy being in nature, traveling, cooking new recipes, eating and trying out new restaurants and food trucks around Portland,OR and hanging out with my dog, Cooper.” Wednesday, December 4, 13

4. How to Use Conjoint & MaxDiff To Put Your Best Product Forward Wednesday, December 4, 13

5. AGENDA • • How to set a Conjoint Question in SA • Conjoint Analysis 101 • MaxDiff Deﬁnitions • MaxDiff vs. Rating Scales • New Enhancements on MaxDiff • Live Demo of both Conjoint & Maxdiff • Wednesday, December 4, 13 Conjoint Deﬁnitions Q &A

6. Conjoint Analysis Made Easy ... With Doughnuts Wednesday, December 4, 13

7. CHOICE BASED CONJOINT ANALYSIS Conjoint is like is display case of doughnuts . . . Wednesday, December 4, 13

8. CHOICE BASED CONJOINT ANALYSIS Conjoint is like is display case of doughnuts . . . A statistical technique used in market research to determine how people value different features that make up an individual product or service Wednesday, December 4, 13

9. CHOICE BASED CONJOINT ANALYSIS Conjoint is like is display case of doughnuts . . . A statistical technique used in market research to determine how people value different features that make up an individual product or service The objective: Determine what combination of a limited number of attributes is most inﬂuential on respondent choice or decision making Wednesday, December 4, 13

10. CHOICE BASED CONJOINT ANALYSIS Conjoint is like is display case of doughnuts . . . A statistical technique used in market research to determine how people value different features that make up an individual product or service The objective: Determine what combination of a limited number of attributes is most inﬂuential on respondent choice or decision making Survey Analytics ONLY supports the Choice Based / Discrete Choice Conjoint Analysis methodology Wednesday, December 4, 13

11. CHOICE BASED CONJOINT ANALYSIS Conjoint is like is display case of doughnuts . . . A statistical technique used in market research to determine how people value different features that make up an individual product or service The objective: Determine what combination of a limited number of attributes is most inﬂuential on respondent choice or decision making Survey Analytics ONLY supports the Choice Based / Discrete Choice Conjoint Analysis methodology CBC empowers the shopper to choose what they want to buy from you. You, the survey creator, are ﬁguratively placing the survey taker in front of the display (of doughnuts) Wednesday, December 4, 13

12. CHOICE BASED CONJOINT ANALYSIS Conjoint is like is display case of doughnuts . . . A statistical technique used in market research to determine how people value different features that make up an individual product or service The objective: Determine what combination of a limited number of attributes is most influential on respondent choice or decision making Survey Analytics ONLY supports the Choice Based / Discrete Choice Conjoint Analysis methodology CBC empowers the shopper to choose what they want to buy from you. You, the survey creator, are figuratively placing the survey taker in front of the display (of doughnuts) Price, flavors, types of ingredients, texture, time of day etc. will influence which doughnuts they will buy Wednesday, December 4, 13

13. WHY CONJOINT ANALYSIS? If you are trying to determine the best combination of products/services to sell that will make you the most money . . . Wednesday, December 4, 13

14. WHY CONJOINT ANALYSIS? If you are trying to determine the best combination of products/services to sell that will make you the most money . . . Choice Based Conjoint mimics the decision making process without actually needing to physically create & sell these products/services. Selling ideas through surveying your target consumer. Wednesday, December 4, 13

15. WHY CONJOINT ANALYSIS? If you are trying to determine the best combination of products/services to sell that will make you the most money . . . Choice Based Conjoint mimics the decision making process without actually needing to physically create & sell these products/services. Selling ideas through surveying your target consumer. Will allow you to review estimated market share and run simulations of concepts before deciding what’s going to give you the biggest ROI. Wednesday, December 4, 13

16. WHY CONJOINT ANALYSIS? If you are trying to determine the best combination of products/services to sell that will make you the most money . . . Choice Based Conjoint mimics the decision making process without actually needing to physically create & sell these products/services. Selling ideas through surveying your target consumer. Will allow you to review estimated market share and run simulations of concepts before deciding what’s going to give you the biggest ROI. It’s easy to add on to your current online/mobile research strategy. Survey Analytics has the easiest conjoint set up in the business. Wednesday, December 4, 13

17. *Cool New Stuff* CONJOINT SET UP DEFINITIONS • • Levels / Attributes: An object or characteristic that is directly related to the deﬁned features. • The features and levels have to be set in stone PRIOR to running a conjoint project. Critical to success of a project. • Rule of thumb: Generally aim for no more than 5-7 features and no more than 5-7 levels. • Task Count: Number of conjoint cycles you want to show the respondents. • Wednesday, December 4, 13 Features: A prominent or distinctive aspect, quality, or characteristic that is an important part of a package of goods. Concepts per task: Number of concepts or packages you want to display on each cycle (page). N/A Option is possible if desired.

21. *Cool New Stuff* CONJOINT SET UP DEFINITIONS • Prohibited Pairs: Prevents speciﬁc pairs of levels from showing up as part of a concept. • *Only on a 1-to-1 level* • Fixed Tasks: Allows you to set up a controlled concept and test against random or d-optimal generated concepts. • Tips for Respondents: Add Additional Info/Pictures to Conjoint features/Attributes What does Bacon topping look like? Add picture and description • Where is validation for conjoint?: Located under Survey Overview Wednesday, December 4, 13

26. *Cool New Stuff* CONJOINT DESIGN OPTIONS • Random: This design is a purely random sample of the possible attribute levels. For the number of tasks per respondent SurveyAnalytics produces a unique set of attribute configurations to be presented to the respondent. • D-Optimal: It is a design algorithm that will produce an optimal design for the specified number of tasks per respondent and sample size. It uses a desired set of experiments to optimize or investigate a studied object. • Wednesday, December 4, 13 Import: For statistically savvy clients who want to design your own conjoint project and have selfdetermined through your own calculations whether their design will yield significant output. *NOT just for anyone...*

32. WHAT SAMPLE SIZE SHOULD I USE? Sample size is a question that comes up very frequently. Richard Johnson, one of the inventors of conjoint analysis, has presented the following rule of thumb for sample size in choice based conjoint: (nta/C) > 1000 n = the number of respondents x t= the number of tasks x a=the number of alternatives per task / C= the largest number of level for any one attribute. Example: 500 respondents, 3 tasks per respondent, 2 alternatives per task and the maximum number of levels on an attribute is 3 you get: (500 x 3 x 2) / 3 = 1000 Generally speaking sample sizes tend to be around 200 – 1200 respondents, 300 comes up most often for a single homogeneous group of subjects. However, if you know you will be working with a smaller homogenous group of respondents, then use D-Optimal design Wednesday, December 4, 13

33. ARE YOU READY FOR CONJOINT? Do the Features and Attributes/Levels appear to be concrete? Features and Attributes should be set in stone, otherwise more research is required (Qual/Quant) to help define the features and attribute list. Do the options appear to be clear and simple to understand? If no, you may want to use the presentation text or the pop up hyperlinks to define the features/levels. Another option: Redefine features and attributes using vocabulary familiar to target audience What is the estimated sample size? Based on number of completes needed, you should decide ahead of time which CBC design to run. Random, DOptimal, Import designs. Additional Tips: -No more than 20 trade-off exercises -No more than 5-6 attributes -Keep the ranges simple Wednesday, December 4, 13

34. CONJOINT DATA REVIEW Wednesday, December 4, 13

35. *Cool New Stuff* CONJOINT RELATIVE IMPORTANCE CALCULATIONS Relative Importance Calculates the percentage of which a particular feature and it’s levels inﬂuenced the concept choice made by the respondent. For each Attribute, the difference between the highest and the lowest PartWorths is calculated. This value divided by the total across all the attributes is the relative importance. https://www.surveyanalytics.com/help/ 158.html Wednesday, December 4, 13

36. *Cool New Stuff* CONJOINT PARTS WORTH CALCULATIONS Parts worth calculation determines which levels within a feature are more valued than others. Survey Analytics uses a maximum likelihood calculation coupled with a Nelder-Mead Simplex algorithm to get the parts worth calculation http://www.scholarpedia.org/article/NelderMead_algorithm https://www.surveyanalytics.com/help/ 702.html Wednesday, December 4, 13

37. *Cool New Stuff* CONJOINT PARTS WORTH CALCULATIONS Parts worth calculation determines which levels within a feature are more valued than others. Survey Analytics uses a maximum likelihood calculation coupled with a Nelder-Mead Simplex algorithm to get the parts worth calculation http://www.scholarpedia.org/article/NelderMead_algorithm https://www.surveyanalytics.com/help/ 702.html Wednesday, December 4, 13

38. *Cool New Stuff* BEST & WORST PROFILE The Best & Worst Proﬁle highlights highest parts worth values and lowest parts worth values. Wednesday, December 4, 13

39. *Cool New Stuff* MARKET SEGMENTATION SIMULATOR Market Segment Simulator gives you the ability to "predict" the market share of new products and concepts that may not exist today. Ability to measure the "Gain" or "Loss" in market share based on changes to existing products in the given market. Wednesday, December 4, 13

40. *Cool New Stuff* MARKET SEGMENTATION SIMULATOR Important steps in Conjoint Simulation: 1- Describe/Identify the different products or concepts that you want to investigate. We call "Proﬁles". Example: Vacation Package with On-site wedding, zoo visit, swimming with dolphins, spa. 2- Find out all the existing products that are available in that market segment and simulate the market share of the products to establish a baseline. 3-Try out new services and ideas and see how the market share shifts based on new products and conﬁgurations. Wednesday, December 4, 13

43. SEGMENT SIMULATOR SET UP 1) Click on Online tools >>Name Simulator Proﬁle>>change proﬁles 2) Click on Wednesday, December 4, 13 to see results!

44. ANALYZING SIMULATOR DATA Wednesday, December 4, 13

45. ANALYZING SIMULATOR DATA Wednesday, December 4, 13

46. MAX DIFFERENCE SCALING Wednesday, December 4, 13

47. MAX DIFFERENCE SCALING MaxDiff assumes that respondents evaluate all possible pairs of items within the displayed set and choose the pair that reﬂects the maximum difference in preference or importance Comparative judgments that can be easily performed, even when the number of attributes is not small (up to 30). The task presents respondents with a set of items, usually 3 to 6, and simply asks them to select the most preferred and the least preferred in the set. Another name for it : Best/Worst Scaling Respondents can typically handle a number of these evaluations, and may be asked to respond to a series of maxdiff questions to gather more preference data. Wednesday, December 4, 13

48. MAX DIFFERENCE SCALING MaxDiff assumes that respondents evaluate all possible pairs of items within the displayed set and choose the pair that reﬂects the maximum difference in preference or importance Comparative judgments that can be easily performed, even when the number of attributes is not small (up to 30). The task presents respondents with a set of items, usually 3 to 6, and simply asks them to select the most preferred and the least preferred in the set. Another name for it : Best/Worst Scaling Respondents can typically handle a number of these evaluations, and may be asked to respond to a series of maxdiff questions to gather more preference data. Wednesday, December 4, 13

49. *Cool New Stuff* MAXDIFF VS. RATING SCALES MaxDiff has less much less respondent fatigue compared to rating scale questions. Survey fatigue is so low that you can run even up to 15-20 different MaxDiff questions if needed. Most/Least or Love/Hate combos. Wednesday, December 4, 13

50. *Cool New Stuff* MAXDIFF VS. RATING SCALES MaxDiff has less much less respondent fatigue compared to rating scale questions. Survey fatigue is so low that you can run even up to 15-20 different MaxDiff questions if needed. Most/Least or Love/Hate combos. The MaxDiff Share of Preference Data is either in percentages up to a 100%, or 100 point count 23% preference to Russell Wilson vs. 20% Marshawn Lynch = analyze and conclude there is a 3% difference in preference between the Seattle Seahawks players. In rating scales, it’s hard to measure what a 4/5 vs. 2/5 scale really means. Rating scales are more difﬁcult to quantify than MaxDiff data output Wednesday, December 4, 13

53. *Cool New Stuff* MAXDIFF FAQS Can I setup and experimental design where the total items are larger than the items presented in a single screen? YES! You can use a large list of attributes and specify the number of attributes per page if desired. Wednesday, December 4, 13

54. *Cool New Stuff* MAXDIFF FAQS Can I setup and experimental design where the total items are larger than the items presented in a single screen? YES! You can use a large list of attributes and specify the number of attributes per page if desired. What kind of a utility estimation model does the system use to calculate the share of preference? Multinomial Logit model Co-created with VP & Director of Analytics, Chris Robson, of ORC International Wednesday, December 4, 13

55. *Cool New Stuff* MAXDIFF FAQS Can I setup and experimental design where the total items are larger than the items presented in a single screen? YES! You can use a large list of attributes and specify the number of attributes per page if desired. What kind of a utility estimation model does the system use to calculate the share of preference? Multinomial Logit model Co-created with VP & Director of Analytics, Chris Robson, of ORC International Wednesday, December 4, 13

56. *Cool New Stuff* MAXDIFF SET UP Attribute Settings: Maximum Attributes: Deﬁne how many attributes out of the list you created that will be tested for each respondent. Example: All = All attributes tested 6/9 = Respondent will only see 6 out of list of 9 Attributes per task: How many of the attributes you will see on each page. Example: 3 Attributes per Task + All from the list = 3 cycles Wednesday, December 4, 13

57. *Cool New Stuff* MAXDIFF SET UP Attribute Settings: Maximum Attributes: Deﬁne how many attributes out of the list you created that will be tested for each respondent. Example: All = All attributes tested 6/9 = Respondent will only see 6 out of list of 9 Attributes per task: How many of the attributes you will see on each page. Example: 3 Attributes per Task + All from the list = 3 cycles Images for Maxdiff are now supported! Wednesday, December 4, 13

65. *Cool New Stuff* MAXDIFF ANALYSIS Preference Analysis Overview: MaxDiff data output is usually represented either in a 100 point system or in percentage calculation that must add up to 100%. Survey Analytics uses the percentage calculation mode. Breakdown is Most or Least Preferred: Each end of the spectrum is calculated separately in most and least preferred table. Overall Percentage Pie Chart: Gives the overall preference calculation Wednesday, December 4, 13

68. LIVE DEMO Wednesday, December 4, 13

69. MAKE MORE MONEY WITH CONJOINT & MAXDIFF Both conjoint and Maxdiff can allow your company to uncover additional insights on consumer preferences on products/ services. Use on both new & existing products/services. Do you need to create new products/services or repackage existing, or a combo of both? Will give you a strong and compelling argument to recommendations for your company or clients. As long as your Conjoint and MaxDiff are clear and easy for people to answer, you can add and create a comprehensive online or mobile survey and review past with new data. DIY conjoint and maxdiff: No consultants required! Wednesday, December 4, 13

70. MAKE MORE MONEY WITH CONJOINT & MAXDIFF Both conjoint and Maxdiff can allow your company to uncover additional insights on consumer preferences on products/ services. Use on both new & existing products/services. Do you need to create new products/services or repackage existing, or a combo of both? Will give you a strong and compelling argument to recommendations for your company or clients. As long as your Conjoint and MaxDiff are clear and easy for people to answer, you can add and create a comprehensive online or mobile survey and review past with new data. DIY conjoint and maxdiff: No consultants required! Wednesday, December 4, 13

71. THANKS EVERYONE! Q&A If you have any further questions about MaxDiff or Conjoint that have not been addressed or would like me to assist with an upcoming project in 2014, Cooper and I are standing by waiting by the computer! Contact a Survey Analytics Sales Representative to get started: sales-team@surveyanalytics.com 1-800-326-5570 My e-mail address: esther.rmah@surveyanalytics.com Wednesday, December 4, 13

How to Use Conjoint and MaxDiff to Put Your Best Product Forward

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How to Use Conjoint and MaxDiff to Put Your Best Product Forward