When the method is used?
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to measure the trade-offs people make in choosing between products and services providers
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to predict their choices for future products and services
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to test a new product or service concepts
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for market segmentation
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to define a design of product or service
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to determine optimum combination between price and design of product or service.
What is the underlying principle?
Trade off assumes that a product can be “broken down” into its component attributes. The objective of trade off is to determine what combination of a limited number of attributes is most preferred by respondents. For example, a car has attributes such as color, price, size, fuel consumption, and model style.
Trade off analysis encompasses a variety of experimental design techniques, data collection procedures, and statistical procedures which can be used to predict the choices that consumers will make between alternatives. These techniques apply when consumers have the ability to choose between distinct (“discrete”) courses of action.
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to buy Brand A, Brand B, some other brand or no brand at all
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to travel by car, train or bus
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to vacation in Sochi, Turkey, Italy, or to stay home in Ekaterinburg
An example: Ekaterinburg cottage market research.
The cottage-building service is a new service in the Urals. And pricing is very complex.
Trade Off methodologies allow to measure the trade-offs people make in choosing between different cottages, to price analysis.
What stages are involved?
There are three phases in the analysis of conjoint data:
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collection of trade-off data through a questionnaire
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statistical data analysis (Hierarchical Bayes theory)
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market simulator (market share distribution and potential changes in market share)
What are the benefits?
A key advantage of trade-off techniques is that they are based on the observation of consumers choices (real or simulated). You do not force a customer to tell you “What’s more important – brand or price?” – you simply observe the choices they make and then make conclusions about attribute importance based on real data.
Ideation
Ideation is a systematic search methodology for generating new product ideas. In product-development, idea-generation is as important to the success of new products as design, testing and product positioning. Ideation is based on a definition of creativity. The technique enables the participants to free their minds of a day-to-day problems and focus on the scenarios for the long-term future. It brings together knowledgeable and experienced participants from all areas related to a birth and development of a new product.
It is a category of quantitative technique somewhat similar to focus groups. Ideation technique differs from a traditional focus group method in the following:
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ideation assumes participation of experts from multiple areas (designers, manufacturers, academia, customers, researchers)
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moderator does not follow a fixed guide, but rather floats along with the group ideas and develops themes of particular interest
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ideation is aimed at generation of new product ideas
Online focus-groups
Online focus-groups method is a combination of qualitative and quantitative techniques. It assumes usage of a real – time research software platform. Online focus-groups help business decision-makers get closer to their customers… faster, more frequently, and at a very low cost!
Online focus-groups hold a number of advantages over traditional qualitative and quantitative techniques:
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live research session with 30-100 people, recruited based on demographics
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real-time, structured dialog and feedback – providing immediate results and analytics
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dynamic qualitative and quantitative questioning – ability to probe and get deep diagnostics to clarify and refine findings in the moment
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involvement of all necessary decision-makers – ability to remotely observe, analyze and react to results in real time
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cost-effectiveness
Online focus-groups method covers a range of research topics:
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new products design
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feature preferences
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product names
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advertising messages.
Price Sensitivity Measurement / The Van Westendorp model
The van Westendorp model was developed by Dutch economist Peter H. van Westendorp to examine patterns of price-consciousness.
The statistical technique of price-sensitivity measurement (PSM) works by asking consumers questions that allow them to indicate when a product is "too expensive" or "too cheap." Graphing these numbers shows a range between expensive and cheap-indicating the likely best price range.
The typical pricing block in the survey includes four questions for each product profile, including respondent’s prices for the product:
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for a bargain – a great value for the money,
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starting to get expensive, but still worth considering,
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so cheap that quality is doubted, and
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so expensive that it would not be considered.
PSM can also be used to:
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compare the price perceptions and sensitivities of different market segments by data analysis
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relate price perceptions and sensitivity to likelihood of purchase - by asking additional questions about interest in the product and propensity to purchase.
