Marketing Analytics (c, d, e, f)
Best Motor Works (BMW) competes in the luxury car market. Your Market Research Team have conducted a study on 1,500 respondents using choice-based conjoint analysis for three attributes, each attribute has two levels (Refer Data): Attribute b1 (Price) $65,000 $85,000 Attribute b2 (Brand) Buzzy Beaut Attribute 3 (Number of Doors) 2 door sports convertible 4 door family sedan The alternatives in the questionnaire are presented in Table 1: Table1: Alternatives in the Conjoint Analysis for BMW Price Number of Alternatives ($1,000) Brand Doors bo b1 b2 b3 1 65 Buzzy 2 door 2* 65 Buzzy 4 door 3 65 Beaut 2 door 4* 65 Beaut 4 door 5 85 Buzzy 2 door 6* 85 Buzzy 4 door 7* 85 Beaut 2 door 8 85 Beaut 4 door Note: *existing product structure To generate an informed report for BMW: (a) Calculate the partworths and covert the partworths to dollar values for a 4 door Beaut family sedan that is priced at $85,000. Comment on your results. (b) Estimate the market shares (choice probabilities) for all eight alternatives. Comment on your results. (c) Explain the limitations of conjoint analysis to estimate market shares. (d) Re-estimate the market shares, given that in the current market there are only four alternatives (2, 4, 6, and 7)* (e) Given that BMW is considering adding to this market, one of the remaining alternatives (1, 3, 5 or 8), determine which alternative is the best for BMW to add to the market by re-estimating the market shares after the addition of each new alternative. (1) Based on the re-estimated market shares in part (e), provide informed recommendations to the best of your marketing knowledge about potential consumer trade-off based on attributes of the recommended new alternative. (1) (2) (3) In other words, should BMW: keep the current four alternatives and not introduce the new alternative introduce the new alternative to replace one of the existing alternatives introduce the new alternative in addition to the current four alternatives D E F H J L M 1 A B C Fach choice set contains three alternatives Respondents Set 1 2 Choice Set Choice 3 Set2 Set3 4 6 2 3 3 The data is from a choice based conjoint experiment. There are three attributes 1 2 2 3 7 2 3 5 6 1 2 5 1 1 Attribute 51 Price 7 4 3 7 5 2 Attribute 2 Brand 5 5 6 3 2 Attribute b3 Number of Doors 6 6 6 8 3 2 Fach has two levels 10 7 4 2 3 2 11 3 4 6 3 8 a 9 Price til $65K i $85K Brand i Buzzy (iiBeaut Doors i 2 door (1) 4 door Each choice set contains three alternatives 12 7 4 3 1 5 10 1 8 3 13 14 15 11 6 4 4 5 3 12 7 1 3 3 16 13 3 3 2 2 8 Table 6 3 Alternatives in the conjoint analysis for BMW 17 14 3 18 7 2 3 1 Alternatives Brand Number of Doors 15 16 3 8 3 3 bo b2 Price ($1,000) b1 $65 19 20 21 b3 1 4 4 12 7 7 8 3 1 0 2 door 18 3 8 S 1 2* 0 0 $65 Buzzy Buzzy Beaut 4 door 22 19 4 8 1 3 3 0 0 $65 2 door 23 20 2 4 2 44 0 0 $65 4 door Beaut Buzzy 24 21 8 4 1 3 5 U $85 2 door 25 22 8 6 5 2 B 0 $85 Buzzy 4 door 26 23 6 1 8 3 3 7 0 585 Beaut 2 door 24 4 6 7 2 8 0 $85 Beaut 4 door 27 28 25 6 1 3 Note: existing product structure Best Motor Works (BMW) competes in the luxury car market. Your Market Research Team have conducted a study on 1,500 respondents using choice-based conjoint analysis for three attributes, each attribute has two levels (Refer Data): Attribute b1 (Price) $65,000 $85,000 Attribute b2 (Brand) Buzzy Beaut Attribute 3 (Number of Doors) 2 door sports convertible 4 door family sedan The alternatives in the questionnaire are presented in Table 1: Table1: Alternatives in the Conjoint Analysis for BMW Price Number of Alternatives ($1,000) Brand Doors bo b1 b2 b3 1 65 Buzzy 2 door 2* 65 Buzzy 4 door 3 65 Beaut 2 door 4* 65 Beaut 4 door 5 85 Buzzy 2 door 6* 85 Buzzy 4 door 7* 85 Beaut 2 door 8 85 Beaut 4 door Note: *existing product structure To generate an informed report for BMW: (a) Calculate the partworths and covert the partworths to dollar values for a 4 door Beaut family sedan that is priced at $85,000. Comment on your results. (b) Estimate the market shares (choice probabilities) for all eight alternatives. Comment on your results. (c) Explain the limitations of conjoint analysis to estimate market shares. (d) Re-estimate the market shares, given that in the current market there are only four alternatives (2, 4, 6, and 7)* (e) Given that BMW is considering adding to this market, one of the remaining alternatives (1, 3, 5 or 8), determine which alternative is the best for BMW to add to the market by re-estimating the market shares after the addition of each new alternative. (1) Based on the re-estimated market shares in part (e), provide informed recommendations to the best of your marketing knowledge about potential consumer trade-off based on attributes of the recommended new alternative. (1) (2) (3) In other words, should BMW: keep the current four alternatives and not introduce the new alternative introduce the new alternative to replace one of the existing alternatives introduce the new alternative in addition to the current four alternatives D E F H J L M 1 A B C Fach choice set contains three alternatives Respondents Set 1 2 Choice Set Choice 3 Set2 Set3 4 6 2 3 3 The data is from a choice based conjoint experiment. There are three attributes 1 2 2 3 7 2 3 5 6 1 2 5 1 1 Attribute 51 Price 7 4 3 7 5 2 Attribute 2 Brand 5 5 6 3 2 Attribute b3 Number of Doors 6 6 6 8 3 2 Fach has two levels 10 7 4 2 3 2 11 3 4 6 3 8 a 9 Price til $65K i $85K Brand i Buzzy (iiBeaut Doors i 2 door (1) 4 door Each choice set contains three alternatives 12 7 4 3 1 5 10 1 8 3 13 14 15 11 6 4 4 5 3 12 7 1 3 3 16 13 3 3 2 2 8 Table 6 3 Alternatives in the conjoint analysis for BMW 17 14 3 18 7 2 3 1 Alternatives Brand Number of Doors 15 16 3 8 3 3 bo b2 Price ($1,000) b1 $65 19 20 21 b3 1 4 4 12 7 7 8 3 1 0 2 door 18 3 8 S 1 2* 0 0 $65 Buzzy Buzzy Beaut 4 door 22 19 4 8 1 3 3 0 0 $65 2 door 23 20 2 4 2 44 0 0 $65 4 door Beaut Buzzy 24 21 8 4 1 3 5 U $85 2 door 25 22 8 6 5 2 B 0 $85 Buzzy 4 door 26 23 6 1 8 3 3 7 0 585 Beaut 2 door 24 4 6 7 2 8 0 $85 Beaut 4 door 27 28 25 6 1 3 Note: existing product structure
