from Marketing Memetics, by Michael Taylor
Every product must have a value proposition, but not every customer values that proposition. It’s commonly useful to determine how customers value different components, features, or other attributes of a product. You can’t just directly ask “what would you be willing to pay?” – you have to derive it through analysis. As Jobs famously said “people don't know what they want until you show it to them”, and that’s what Conjoint analysis does. Choosing between alternatives uses less cognitive load, so we’re not as likely to abandon the survey or make something up.
Conjoint analysis works by breaking a product or service down into its component parts (referred to as attributes and levels), and then testing different combinations to identify what’s driving consumer preferences. Which phone do you prefer: $499 with a 6.5 inch screen, $299 with 19 hours battery life, or $399 but still has a headphone jack? Survey respondents choose from multiple combinations, then Multinomial Logistic Regression reveals the value of each item or ‘Part-Worth Utility’. Results are broken down by attribute and levels, so you can tell which screen size and battery life to maximize sales, and confidently drop the headphone jack like Apple did in 2017.
There’s no reason conjoint analysis has to be limited to product attributes: its works on anything consumers choose between. If you break down your ad creative into its component parts, or memes, you can test different combinations to identify what’s driving clicks and conversions.