Application of Conjoint Analysis in Improving the Value of New Product Development

Abstract

One of the most important elements of economic and business activity is developing a strategic marketing plan to improve growth prospects. One of the most important aspects of this in marketing is to understand the behavioral patterns of customers, in order to meet their needs and achieve business objectives. The consumer behavior analysis is key to establish the level of preferences expressed by the consumer towards a product or service. For this reason, conjoint analysis (CA) is one of the main models in the field of consumer research. This paper identifies the usefulness of CA as a marketing strategy in new product development (NPD). An application to “Forte Hotel Design” (presented by Lilien and Rangaswamy, 2004) is developed to highlight how CA can be an effective tool for marketing new products/services. Forte Hotels is a European hotel chain that wants to open a new facility in the United States. This research demostrates that there are multiple ways to conduct marketing research for any product or service. While the Forte Hotel case study used segmentation and targeting tools in its original analysis, the study shows that CA can also be used to analyze this marketing problem and can lead to similar decisions. This study highlights the value of CA as a tool to evaluate product attributes and shows its value in helping to make marketing decisions. It also shows that there is more than one way to dissect a marketing problem. The original case was solved using segmentation and targeting marketing tools, but this study shows that CA can be used to effectively make marketing decisions on new product development that lead to the same results/decisions as other marketing tools. This study shows original ways of using CA, to dissect a service design problem in new product development and to facilitate both product management and project management.