Getting added value from conjoint analysis
The added value of conjoint analysis lies in the fact that values that aren’t measured can also be predicted. This is generally achieved by linking the values that one wants to measure in a linear fashion. Even though this normal adaptation of conjoint analysis has its advantages, conjoint remains a flawed tool because it simply ignores the fact that price assessment follows a step-by-step model rather than a linear pattern.
An important correction of the analysis is achieved by including the consumer’s not-so-rational decision-making process. Prices that are optimized on the basis of the consumer as homo oeconomicus will therefore mean that the conjoint analysis (in its normal adaptation) will not have a very major impact. The validity will be greatly increased if the analysis incorporates the irrationality associated with decisions made by consumers plus a more in-depth analysis of the psychological side of decision-making. (Dr. Bauer, Vocatus AG, 2006-2011)
To get more in-depth knowledge of this process, the European Pricing Platform is organizing a Master Class training on the Pricing Toolbox, given by Dr. Bauer on the 9th and 10th of May in Hamburg. In this training Dr. Bauer will introduce his expert view of the ‘Psychological Price Profile’ and take you into the world of financial risk-taking, rational decision-making, and how to set prices accordingly. This means gearing your pricing strategy towards existing consumer types that are based upon pricing psychology. By focusing on how to adapt existing tools that are dealt with during the training (such as BPTO and conjoint analysis), Dr. Bauer will show you how to get the best of both worlds. During the course of this two-day training, he will transfer his insights to the participants’ own pricing issues so that they can maximize their own organization’s business strategy.
Articles of Dr. Bauer can be found online at: http://www.vocatus.com/publications/feedback.php.
For more information on this training please visit: http://www.pricingplatform.eu/site/public/trainings_detail.asp?id=126.