Williamson trade off model

1. Names Roll No
Amol Kadam 28
Vaibhav Panchal 39
Tejas Vasa 58
Niraj Dwivedi 72
Shashank Pamul 94
Pratima Patil 98
Presented to: Prof. Shilpa Shinde

2. • The model was first presented by Oliver
Williamson.
• This model emphasizes the trade-off associated
with horizontal mergers between gains resulting from
lower costs of production and the losses associated
with higher prices due to greater degree of monopoly
power.

4. • Effect of merger of Northwest Airlines (NW)
with Republic Airlines (RC) on prices
Market Total
Markets
Relative prices Average
change(%)
1985 1986 1987 1985-1987
Category 1 16 2.8 4.5 5.9 4.3
Category 2 41 2.6 3.5 2.8 2.6
Category 3 11 8.2 10.3 7.5 5.2
Category 4 16 6.7 9.5 7.1 5.5

5. • Model only considers the effect of the merger
on price.
• The model ignores the possibilities that similar
gains in cost reductions and efficiencies may
instead arise due to growth of market
demand.

6. Definition:
Conjoint analysis (also called trade-off analysis) is a
multivariate technique used specifically to understand how
consumers develop preferences for products or services and
to formulate predictions about market attitude towards new
product concepts.

7. Different Perspective different goals
• Buyers want all of the most desirable features at lowest
possible price
• Seller wants to maximize profit by:
Minimizing cost of providing features
Providing products that offer greater overall value than
the competition
Conjoint Analysis is concern with understanding how people
make choices between products or services or a combination
of product and service, so that businesses can design new
products or services that better meet customers underlying
needs.

8. • Conjoint Analysis determines how your customers trade-off different
price levels with the features of your product that they most desire -
without asking them directly.
• Conjoint Analysis tells you the must-have features of your product by
segment, so that you can tailor your marketing efforts to a particular
demographic or behavioral profile.
• Conjoint Analysis reveals what factors drive consumer behavior: brand,
price, or features - and whether your brand can command a premium.
Conjoint Analysis helps to Determine:

9. • Traditional Conjoint
Full Profile
Partial Profile/Fractional Factorial Design
Self Explicated
• Adaptive Conjoint Analysis(ACA)
• Choice Based Conjoint(CBC)

10. • The buyer perceives a product or service as a bundle of
attributes or characteristics.
• When a potential buyer evaluates a product, they mentally
associate a value (or a utility) to each attribute level.
• To determine the total utility of the product, the buyer
mentally combines the amounts of utility provided by each
attribute at various levels.
• The rule used in combining attributes to produce an evaluation
of the total utility of the product/service is a compensatory
rule.

11. To compare the different product concepts, the
researcher must select a measure of preference
either:
• The non-metric rank-ordering method (i.e. rank-
ordering the product concepts from most to least
preferred)
• The metric rating method (i.e. a 1 to 10 scale).

12. • Attribute: An Attribute is a general feature of a product or service –
say size, colour, speed, delivery time
• Level: Each attribute is then made up of specific levels. So for the
attribute colour, level might be red, green, blue, and so on.
For Example:-
The attributes to be considered are:
• Brand: L'Oreal, Garnier, Gillette and Riem
• Price: 50, 100, 150 and 200
• Types of packaging: spray and aerosol.
In this study, there three attributes of which two have four levels
and one two levels, thus in total there are 32 (4x4x2) distinct
product concepts.

13. • First, select what attributes of the product you would like to
test, and what the possibilities are for each attribute. To
demonstrate, let's use the example of an ice cream shop,
which might want to know consumer attitudes about:
– preferred flavor (vanilla, chocolate, strawberry, or black
raspberry)
– price (Rs 10, RS. 15, RS. 20, Rs. 30)
– container (cone, cup)
– freshness (homemade & fresh, factory-produced)
– healthiness (reduced fat, regular)

16. What Types of Companies Have Used
Conjoint Analysis?
• A wide variety of companies and service
organizations have successfully used conjoint
analysis. For Example:
 The Western Canada Lottery Corporation
 A natural gas utility

17. • The attributes are totally new to consumers .
• The number attributes to consider to have a
realistic description of the product concept is
too large.
• The cognitive capacities of the respondents are
weak.