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    Assignment: Team Members (Team 9) : Date of Submission

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    DikshaUpadhyay
    This document contains a lab report submitted by a team analyzing customer preferences for different smartphone attributes through conjoint analysis. It finds that price is the most important attribute, followed by memory, brand and projector, while integrated cellphone is least important. It also calculates customers' willingness to pay for different attributes and finds adding a projector to one handset model would increase its market share and profits.

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    Assignment: Team Members (Team 9) : Date of Submission

    Uploaded by

    DikshaUpadhyay
    58 views4 pages
    This document contains a lab report submitted by a team analyzing customer preferences for different smartphone attributes through conjoint analysis. It finds that price is the most important attribute, followed by memory, brand and projector, while integrated cellphone is least important. It also calculates customers' willingness to pay for different attributes and finds adding a projector to one handset model would increase its market share and profits.

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    conjoint analysis

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    This document contains a lab report submitted by a team analyzing customer preferences for different smartphone attributes through conjoint analysis. It finds that price is the most important attribute, followed by memory, brand and projector, while integrated cellphone is least important. It also calculates customers' willingness to pay for different attributes and finds adding a projector to one handset model would increase its market share and profits.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    58 views4 pages

    Assignment: Team Members (Team 9) : Date of Submission

    Uploaded by

    DikshaUpadhyay
    This document contains a lab report submitted by a team analyzing customer preferences for different smartphone attributes through conjoint analysis. It finds that price is the most important attribute, followed by memory, brand and projector, while integrated cellphone is least important. It also calculates customers' willingness to pay for different attributes and finds adding a projector to one handset model would increase its market share and profits.

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    © All Rights Reserved
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    Assignment: Lab 1 Report

    Team Members (Team 9): Diksha Upadhyay| Gauri Mathur| Mithila Hegde| Umar Khan| Ziyan Tang
    Date of submission: 02/06/2022

    Question 1
    Below is a snip of the first 5 entries of part-worth functions for the respondents using the first 18
    profiles.
    price_2 price_2 cellinte projecto memory memory_ brand_ brand_ interc
    99 49 gr r _GB32 GB16 Hand2 Hand1 ept
    R1 3.33 3.83 -1.08 -0.42 1.67 1.50 -0.50 0.67 1.36
    R2 -0.17 0.33 0.42 0.08 -0.33 -0.50 0.00 0.17 4.36
    R3 2.17 1.67 0.83 2.17 -1.50 -2.17 0.50 0.83 1.89
    R4 2.67 2.17 0.83 0.17 0.50 -0.67 1.00 2.33 0.89
    R5 1.50 3.67 0.17 1.58 -1.17 -2.17 2.50 2.67 -0.72

    Question 2

    As per the respondents, the price level of 249 has the most utils when compared to 299 and
    349. The integrated-cellphone attribute barely has an impact, while projector and a memory of
    64 GB are preferred. Looking at the handsets, we can infer that between the three handsets,
    people prefer Prophone.com’s cellphones over Link, however they are almost indifferent
    between Hand I and Hand II brands.

    Question 3
    This chart shows how strongly the variations of attributes affect customer’s choice. As per
    the analysis, price is the most significant attribute of the product when making a purchasing
    decision. Since the price range of 249-3is considerably big The least significant is integrated-
    cellphone, whereas projector, memory and brand are almost twice as important as
    Question 4
    integrated-cellphone.

    Segment 1 who placed high interest in built-in projector have less attribute importance on
    price, while Segment 2 who have lower preference in built-in project placed more importance
    on price. The segment with low preference for projector also placed greater relative
    importance on brand. However, the two segments place similar relative importance on
    memory.
    This could imply that those that have high preference for projector may be willing to pay
    significantly higher, without sacrificing much on other attributes such as memory. Hence it
    would be meaningful to calculate the willingness to pay for projector feature.

    The willingness to pay for high preference segment ranges from $156.50 to $283.09, while the
    willingness to pay for low preference segment ranges from $17.94 to $20.62. Hence,
    Prophone.com could launch a premium product with a built-in projector for high preference
    segment while keeping current products in the market.

    High Preference for Projector


    Case 1: Dropping price from $349 to $299 increases consumer utils from 0 to 0.85; i.e. 0.85 utils
    0.85 utils is equal to 50 dollars
    Utils from Projector: 2.67
    0.85 utils equals 50 dollars
    Hence, 2.67 utils equals 156.50 dollars

    Case 2: Dropping price from $299 to $249 increases consumer utils from 0.85 to 1.33; i.e. 0.47 utils
    0.47 utils is equal to 50 dollars
    Utils from Projector: 2.67
    0.47 utils equals 50 dollars
    Hence, 2.67 utils equals 283.09 dollars
    Low Preference for Projector
    Case 1: Dropping price from $349 to $299 increases consumer utils from 0 to 1.20; i.e. 1.20 utils
    1.20 utils is equal to 50 dollars
    Utils from Projector: 0.43
    1.20 utils equals 50 dollars
    Hence, 0.43 utils equals 17.94 dollars

    Case 2: Dropping price from $299 to $249 increases consumer utils from 1.20 to 2.24; i.e. 1.04 utils
    1.04 utils is equal to 50 dollars
    Utils from Projector: 0.43
    1.04 utils equals 50 dollars
    Hence, 0.43 utils equals 20.62 dollars

    Question 5
    The market shares for the three profiles are shown in the table below. The predicted market
    shares for Product 1 (Hand I) and Product 2 (Hand II) differ greatly across the two methods, while
    that for Product 3 (Link) does not change much (13% in both scenarios).

    First Choice rule


    Product 1 Product 2 Product 3
    Buyers 62 19 14
    Mkt Share 58% 18% 13%

    Share of Preference rule


    Product 1 Product 2 Product 3
    Expected buyers (Sum of Probability) 30.05 21.82 7.75
    Mkt Share 50% 37% 13%

    The First Choice rule assigns a consumer’s entire purchase to that product with the highest
    utility while the Share of Preference rule splits the probability of purchase among the competing
    products based on their utilities. Share of Preference model incorporates the irrationality
    involved in consumer decision making and the effect of other events that may be outside the
    control/view of the model.

    The only two differences between Product 1 and 2 are that of model and price. As Price has high
    attribute importance, it may be affecting the total utility of the product significantly, resulting in
    higher market share for Product 1 in First choice rule. In fact, since they are the same brand but
    different model, there could be a certain level of indifference between Product 1 and 2 that gets
    captured in Share of Preference Method but not in First Choice rule. (This indifference was also
    noted in Q2)

    Question 6
    Using First Choice Rule in Q5 we see that Product 2 (Prophone.com’s Hand II) without the
    projector feature has 19% market share. Computing the new market share after introducing the
    Projector feature in Product 2 we see that it increases to 49%. The table below shows that gains
    in market share for Product 2 occurs primarily due to cannibalization since Product 1’s market
    share goes down from 68% to 42%. The competition only loses 3% market share (from 13% to
    10%). Hence, introducing a projector feature in Hand 2 will eat into Hand 1’s market share by
    26% while competition will see a 3% drop in their sales.

    Without Projector With Projector


    Product 1 Product 2 Product 3 Product 1 Product 2 Product 3
    Buyers 73 20 14 44 51 10
    Market
    Share 68% 19% 13% 42% 49% 10%

    Question 7

    Prophone.com will earn an incremental profit of $5,486 if they do include a built-in projector on
    Hand II. Below are the calculations.

    Hand II With Projector Hand II Without Projector


    Fixed Costs = $0 Fixed Costs = $0
    Marginal Costs = $65 Marginal Costs = $0
    Price of Hand II = $299 Price of Hand II = $299
    Quantity Sold = 491 Quantity Sold = 19*
    Profit = (299-(65+0)) X 49 = $11,466 Profit = 299 X 20 = $5,980

    Therefore, Incremental profit by adding built-in projector = 11,466 – 5,980 = $5,486

    1
    Taking a conservative approach by assuming the people indifferent between Hand1 and Hand2 will go for Hand1
    as its less expensive.

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