Use Case: Using Conjoint Analysis to Determine the Optimal Smartphone Feature Set

Objective:

To identify the optimal combination of smartphone features that maximizes customer satisfaction and purchase likelihood. This analysis helps the company understand which smartphone features (e.g., price, camera quality, battery life, screen size) are most important to customers when deciding which product to buy.

Methodology:

Approach: Conjoint Analysis

  • Objective: To determine the relative importance of various smartphone features and identify the feature combinations that drive customer choice and willingness to pay.

  • Independent Variables:

    • Price (e.g., $499, $699, $899)

    • Camera Quality (e.g., 12 MP, 16 MP, 20 MP)

    • Battery Life (e.g., 10 hours, 15 hours, 20 hours)

    • Screen Size (e.g., 5.5 inches, 6.1 inches, 6.7 inches)

  • Dependent Variable:

    • Customer Preference: The likelihood of a customer purchasing a smartphone based on the features provided.

Procedure:

  1. Survey Design: A choice-based conjoint survey is created, asking customers to select their preferred smartphone from a set of 8 product profiles, each featuring different combinations of price, camera quality, battery life, and screen size.

  2. Part-Worth Utilities: The survey data is analyzed to determine the part-worth utilities for each feature level (e.g., the added value of a 16 MP camera compared to a 12 MP camera).

  3. Relative Importance: The relative importance of each feature is calculated to understand which factors most influence customer preferences.

Key Findings:

Feature Part-Worth Utility Relative Importance (%) Interpretation
Price -0.60 45% Price is the most significant factor. A lower price dramatically increases the likelihood of purchase.
Camera Quality 0.40 25% Camera quality has a strong impact, with customers willing to pay more for better camera performance.
Battery Life 0.25 15% Battery life is important, but less so than price and camera quality. Longer battery life improves satisfaction but is secondary.
Screen Size 0.15 15% Screen size is a moderate factor; customers prefer larger screens, but it is not as important as price or camera quality.

 

Insightful Takeaway:

  • Price is the dominant factor in driving customer purchase decisions. Customers are highly price-sensitive, and a lower price point significantly increases the probability of purchase.

  • Camera Quality is the second most important factor. Customers value higher camera quality and are willing to pay a premium for better camera specifications, especially if the price is reasonable.

  • Battery Life and Screen Size have a moderate but secondary impact on customer satisfaction. While battery life is essential, especially for heavy users, customers are more willing to trade off battery life for a more affordable price or better camera quality.

Implications for Action:

  1. Pricing Strategy:
    Focus on offering smartphones at a competitive price (around $499) to attract budget-conscious customers, while still providing a 16 MP camera and 15-hour battery life for better overall value.

  2. Feature Focus:
    Prioritize camera quality and battery life. Offer an option with a 20 MP camera for premium customers, while also maintaining lower-cost options with 12 MP for price-sensitive segments.

  3. Product Segmentation:
    Introduce multiple product tiers to cater to different customer segments:

    • Budget Model: $499 price, 12 MP camera, 10-hour battery, 5.5-inch screen.

    • Mid-Range Model: $699 price, 16 MP camera, 15-hour battery, 6.1-inch screen.

    • Premium Model: $899 price, 20 MP camera, 20-hour battery, 6.7-inch screen.

  4. Marketing Strategy:
    Emphasize the camera quality and price points in marketing campaigns to align with customer preferences, while also promoting the battery life and screen size as secondary differentiators.