Tuck School of Business

Conjoint Analysis Group Exercise

Prof. Jackie Luan

The data required to complete this assignment is in “Conjoint_Group_Spreadsheet.xls”. The grey area in the “Analysis” worksheet contains the conjoint individual regression results of 247 students. (A separate “Sample Individual” worksheet is attached for your reference. Each individual’s regression coefficients were obtained from the pink area on this worksheet.) For this exercise, assume these subjects constitute a representative sample of potential HDTV buyers.

Answer the following questions briefly:

1. Suppose there are three competing products in the market. What are the market shares for the three products?

Product 1 Product 2 Product 3 Sony Samsung LG 8X standard resolution 4X standard resolution 2X standard resolution 32’’ (16:9) 42’’ (16:9) 32’’ (4:3) Digital 6-Channel SoundDigital Stereo Digital Stereo $2,499 $1,899 $1,499

For your convenience, these products are coded in terms of dummy variables in the blue area. Check whether the dummy variables are created correctly.

(Hint: to answer this question, you need to (1) predict each individual’s utility from each of these three options based on his/her regression coefficients, (2) determine which option offers the highest utility to the individual and therefore he/she will choose, and (3) compute market shares based on all individuals’ choices.)

2. Suppose you are a marketing consultant for LG. Your client is pondering a product improvement to increase market share. The two options are: (1) to upgrade picture resolution from 2X to 4X standard resolution, and (2) to upgrade sound quality from Digital Stereo to Digital 6-channel. Suppose these two options have approximately the same effect on your cost structure (including R&D and production cost). Which improvement option would you recommend to your client?

3. Based on your experience so far, what do you consider the major strengths and weaknesses of conjoint analysis? (Please based your answers on just your own experience and do not consult any outside sources such as Wikipedia when answering this question.)

1 Hand in a hard copy of your group’s answers to the above questions. Also, upload your worksheet to Blackboard. The naming format for the uploaded spreadsheet is “Conjoint_[Section Number]_[Group Number].xls” where [Section Number] is either 10A or 2A, and [Group Number] is the number of your study group as assigned.