Conjoint Analysis is perfect for answering these types of questions:

• What is the optimal feature set for my product?
• What price level maximizes its profitability?
• What services are consumers willing to pay more for in the product?
• Which of these changes will increase our market share?
• What impact will this have on my current suite of products/cannibalization?

First used in the 1970’s conjoint analysis to this day continues to represent an important market insight tool. The benefits of conjoint analysis include being able to quantify and compare the perceived importance of product or service attributes. Conjoint analysis from a practical sense allows customers to rank various product configurations, each made up of specific attributes and benefits. This analytical technique can also be used to understand how customers make “tradeoffs” in product features and benefits, and what dollar value they are wiling to pay for each of those features and benefits. Conjoint analysis permits us to address the question of which product features or benefits have the greatest effect on behavior or purchase intent.

What is the Goal of Conjoint Analysis?
The goal of any conjoint survey is to assign specific values to the range of options buyers consider when making a purchase decision. Armed with this knowledge, marketers can focus on the most important features of a product or service, and design products, services and messages that are most likely to resonate with target buyers.

How does Conjoint Analysis Work?
Conjoint analysis involves the measurement of consumer preferences, or acceptability between choice alternatives. The name "Conjoint Analysis" implies the study of the joint effects. In marketing applications, we study the joint effects of multiple product attributes on product choice. When asked to do so outright, many consumers are unable to determine the relative importance that they place on product attributes. For example, when asked which attributes are the more important ones, the response may be that “they all are important”. Furthermore, individual attributes in isolation are perceived differently than in the combinations found in a product.

It is difficult for a survey respondent to take a list of attributes and mentally construct the preferred combinations of them. The task is easier if the respondent is presented with combinations of attributes that can be visualized as different product offerings. Fortunately, conjoint analysis can facilitate the process. Conjoint analysis is a tool that allows a subset of the possible combinations of product features to be used to determine the relative importance of each feature in the purchasing decision; the relative values of attributes considered jointly can better be measured than when considered in isolation.

How is the Data Analyzed?
There are several varieties of standard statistical methods used in conjoint analysis to translate respondents' answers into important values or utilities. The actual values obtained by these statistical methods are useful; however, the relative values or relationships between each of the attributes are of more importance.

The full Paper is available in PDF format

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References:

Journal of Marketing Education
Industrial Statistics Research
The Marketing Revolution, A Radical manifesto for Dominating the Marketplace, Kevin J. Clancy, Robert S. Shulman

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