Skip to main content

Conjoint Analysis - Not Only For Brand Equity Measurement

In 2013, Apple faced litigation from over 59 patent holders - claiming infringement. We also have seen an enormous amount of uptake in patent litigation - between corporate technology giants like Apple, Samsung and Microsoft.

One of the fundamental issues around patent litigation is the value of the feature or tool that is being infringed on. Typically patent litigation around a product consists of one company including a feature or a tool that is covered by a patent. For example, in Apple’s case it lost a “Swipe to Unlock” feature - that it had patented, in a German court - however it did win against Motorola in the United States.

In such patent litigations, invariably the question is largely around damages and the model for computations of the damages. Obviously, there are competing theories around how much a feature is valuable to a product. Here is where Conjoint Analysis comes to the rescue.

Conjoint Analysis can assign unique utility values - essentially a measure of importance - to each feature in a product. Fundamentally Conjoint Analysis allows us to break down a product into its constituents elements - its primary attributes. Once a product is broken down into its constituents, we can assign utility values to each of the levels of an attribute. If price is one of the attributes, we can also estimate the physical dollar value of each of the attributes.

Recently patent trial lawyers have been experimenting with Conjoint modeling to determine valuation of the features that are under infringement. This also gives a clear case of coming up with a model to determine how much a feature is valued.
QuestionPro has a built in Brand Equity Measurement Model - whereby brand is just another feature.

help-762-1

In this particular case, we are measuring the brand equity based - but this same use case can be extended to measure product feature valuation.

How is the Feature Valuation (or Brand Equity) computed?
The fundamental thesis here is that - when we do a conjoint study - we determine utility - this is the numeric value / score associated with each attribute of a product. For example, if we think of a mobile phone example: We will typically generate a table like this

Brand:
  • Apple iPhone
  • Samsung Galaxy
Utility.3
.8
Screen Size:
  • 4 Inch
  • 5.1 Inch
-.1.5
Cost:
  • $399
  • $599
.6.2

Conclusion:
This gives a simple model to determine the $/Utility. The Cost attribute gives us a model for a $/Utility distribution - and we can leverage that to compute the actual dollar amount, relative to a base for _both_ screen size as well as a brand.

Conjoint Analysis can not only be used for Brand Equity measurement, but also feature valuation - since effectively from a technical standpoint - a brand is simply another feature - that customers are evaluating - when making a purchasing decision. Typically conjoint models have been used for customer preference evaluations - but with the introduction of the cost/pricing element, we can not determine economic demand curve for all the attributes.

If you’d like to find out more about Conjoint Analysis then join our upcoming webinar. On 22 June, QuestionPro is hosting a webinar “A Beginners Guide to Choice-based Conjoint Analysis” with Paul Richard McCullough and me (Ray Poynter). Click here if you would like to attend the webinar or to find out more about the webinar.
Further Reading:
Greg Allenby and his team of researchers have expanded upon this model, not only to include the demand side - but they have proposed, for patent disputes, a model for loss of profit due to infringement. Read it here.

Comments

Popular posts from this blog

Results of the Presidential Job Index Survey (week ending 7/1/2010)

Quick update on the results for the presidential job index survey for the week ending 7/1/2011. As a reminder this is a weekly survey that we conduct and we publish the results for the survey every Friday. To participate in this week's survey, please download the SurveySwipe application and take the survey.

Remember, you get points that you can redeem for various rewards when you take our surveys. We have already distributed several paid apps like Angry Birds for free.

Highlights

Almost 900 respondents took the survey.
52% vs 53% last week of the respondents approve of the job that President Obama is doing.
Respondents included 28% Democrats (31% last week), 25% Republicans (22% last week), 24% independents (27%) last week and 2% with the Green Party (3% last week).



You can view the reports here or directly on your phone.

Top 5 Infographics of the Week: Cyber Security

Earlier this week, we experienced a power outage with our data center at Internap. During this short period of time, our customers were unable to access the site. Luckily, it didn't last long and we are back up and running now thanks to our dedicated support team that responded quickly and worked diligently.

Cyber security is, and always has been, a very important issue for us as we continue to grow and meet the demands of a technology-driven society. Nothing is more paramount than the safety of your valuable data. And apparently we weren't the only ones affected, as LinkedIn was experiencing difficulties on the same day and Internap had 3 massive outages earlier this year. Check out these infographics with stats on the importance of cyber security and the impact it can have on small-medium sized businesses.

Top 5 Infographics of the Week: Internet of Things

In 2008, the number of things connected to the internet exceeded the number of people on Earth. By 2050, we are expected to surpass 50 million different devices connected to the internet. And we're not just talking smartphones and tablets - we mean everything. Wearable tech, household appliances, smart homes, public transportation, hospitals and even cattle have all been using sensors to transmit data automatically. It is an exciting yet scary time to be alive. The various interactions between these different entities are opening up doors for more apps, more software and more auxiliary services. With so many "things" connected online, the possibilities for information exchange becoming wider everyday. Check out the top 5 infographics to learn more about the IoT.