Have an idea?

Visit Sawtooth Software Feedback to share your ideas on how we can improve our products.

"Proof" that that's OK to do a pricing conjoint (2 attributes only: Product & Price)

Dear Sawtoothers,
could you please point in the direction of some "evidence" that shows that it's OK to run CBCs with only 2 attributes: Product and Price.
We have a client who just hired some consultant who says that DCMs with just 2 attributes (Product and Price) are no good because they force the respondent to focus only on price.
I thought it's more of a "industry-wide" question for us, Marketing Scientists - because many of us do this type of research. I am sure Sawtooth has plenty of evidence to the contrary. Thanks for any hints!
asked Apr 21, 2014 by Dimitri Bronze (620 points)
retagged Apr 21, 2014 by Walter Williams
Thanks a lot, Bryan and Keith!

3 Answers

0 votes
Our founder, Rich Johnson, taught me back in the 1990s that he thought CBC studies should include at least another (fairly unimportant) "decoy" attribute other than just brand and price.  That way, respondents would be less likely to see that the study was just about brand and price.  The utilities for the "decoy" attribute should be estimated, but their impact could be ignored in the market simulator (which only dealt with brand and price).  This seems like good advice to me, though I think it has generally been ignored by the Sawtooth Software community.  

I wish I could say that a great deal of evidence has been accumulated one way or the other (about including or not including the "decoy" attribute in CBC).  But, I cannot think of a single case comparing the results with or without the decoy.

That said, if brand + price only CBC's were systematically failing because respondents knew it was just about brand vs. price tradeoffs, there would be a lot of grumbling and abandonment of this approach--which is not seen.
answered Apr 21, 2014 by Bryan Orme Platinum Sawtooth Software, Inc. (131,390 points)
0 votes

I would add that it may matter how exactly you ask the questions.  In some instances that are frequently called "brand price tradeoff" (BPTO) the task is structured so that respondents see all the products at their lowest price and then they choose one.  Once they choose that brand, it's price goes up one level.  This continues on until the respondent chooses her favorite product at its highest price.  In such an experiment all but the dimmest respondents see that the experiment is all about price.  It is easy to think that respondents presented so blatantly with the objective of the study might be biased in some way.    

On the other hand, if the brand price is structured as a standard CBC experiment then prices and brands vary independently and the respondent isn't forced to see price reacting to her earlier choices.  I think this latter approach may be a much better way of doing an experiment with just price and brand in it, though as Bryan notes, we haven't seen much in the way of empirical testing on this topic.
answered Apr 21, 2014 by Keith Chrzan Platinum Sawtooth Software, Inc. (50,675 points)
0 votes
We just completed a study with just product and price.  Went great.  If pricing is the goal of the study, what better method is there?  The versatility of the simulator software coupled with the CBC methodology is tough to beat.
answered Apr 21, 2014 by James
Exactly. We also do it all the time. It's the first time I got a push back. Hence, my question.