Conjoint analysis is one of the most popular methods used to measure the preferences of individuals or groups. It determines, for instance, the degree to which consumers value specific products, which then helps in developing sound pricing strategies. However, this method has some pitfalls that can hinder its effectiveness and application in pricing research, which the author addresses in this article.
In this article, the author demonstrates the use of Design-to-Value (DTV) and Cost Integrated Conjoint Analysis as an approach for delivering winning product pricing strategies with high value to cost ratios. This article draws upon recently completed pricing consulting projects to illustrate the effectiveness of this approach.
While there are other research techniques that seek to understand the perceived value of products or services, the Conjoint Analysis method indirectly addresses the customer and therefore bypasses biases from direct research methods that make it harder to correctly model consumer choice behavior. In this article, the authors examine the benefits of Conjoint Analysis in developing pricing strategies, present several methods for applying this approach and review case studies of successful pricing projects.