Jones.Zak Conjoint Analysis Tool Summary

Conjoint
Analysis
Consulting
Report
April 25
2015
This report is based on a conjoint analysis study pertaining to
the cell phone industry. The recommendations and analysis to
follow have significant strategic importance and should be
taken into careful consideration by Samsungmanagement.
Zak Jones
MKT534
Analytical Tools for Marketers

Conjoint Analysis Consulting Report 2015
2
TABLE OF CONTENTS
Executive Summary 3
What Is Conjoint Analysis? 4
Why Use Conjoint Analysis? 4
What assumptions must we make? 4
How Is a Conjoint Analysis Research Study Conducted? 5
Step 1: Define the core product and identify relevant features and levels: 5
Step 2: Define the nature of stimuli and create product profiles. 5
Step 3: Choose and list relevant subsets of product combinations 6
Step 4: Present profiles by obtaining preferences data and feilding a large-sample survey 6
Step 5: Analyze Data and Interpret Output 7
Creating the conjoint anlaysis bar chart: 7
Managerial outputs from conjoint analysis 7
Determine Feature Importance: 7
Better understand the customer value structure: 8
Find the best product based on total utility: 8
Calculate market share: 8
Simulate market share and profitability: 8
Identify Barrier to Entry: 9
Strengths and weaknesses of conjoint analysis 9
Recommendations for Samsung Galaxy S6: 9
Appendix: 10

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EXECUTIVE SUMMARY
A CONJOINT ANALYSIS STUDY HAS BEEN CONDUCTED ON THE CELL PHONE INDUSTRY. THIS STUDY USED
A SERIES OF FEATURES, LEVELS, AND PROFILES TO IDENTIFY THE IDEAL PRODUCT CONSUMERS ARE
LOOKING FOR. WHILE SAMSUNG IS ONE OF THE INDUSTRY LEADERS IN THE TELECOMUNICATIONS
INDUSTRY THERE ARE SEVERAL KEY FACTORS THAT THEY COULD IMPLIMENT IN ORDER TO GAIN MORE
MARKET SHARE. THE CELL PHONE INDUSTRY IS A MATURE INDUSTRY THAT IS GROWING AT A RAPID
PACE DUE TO THE EMERGENCE OF NEW TECHNOLOGY, A SATURATED MARKET, AND THE EVER
INCREASING NEED FOR INDIVIDUALS TO STAY CONNECTED.
WITH CONSUMERS UTILIZING THEIR PHONES FOR MORE INFORMATION AND REASONS BATTERY LIFE HAS
BECOME A PIVITAL FEATURE FOR MOST PEOPLE. INDUSTRY STANDARDS FOR EXPECTED “TALK TIME” OF A
BATTERY ARE ABOUT SIX HOURS, BUT CONSUMERS WOULD PREFER IF THEIR PHONES WOULD ENDURE NINE
HOURS OF TALK TIME ON A SINGLE CHARGE.
NETWORK PROVIDERS ARE ALSO A KEY FEATURE FOR MOST PEOPLE. THE EMERGENCE OF DATA,
DOWNLOADING, AND GPS ON PHONES HAS INCREASED OUR NEED FOR FASTER AND MORE RELIABLE NETWORKS.
MANY PHONES ARE ONLY AVAVIALBE ON SPECIFIC NETWORKS AND THIS CAN GREATLY INFLUENCE THE
PURCHASE DECISIONS OF CONSUMERS.
IT IS NOT SURPRISING THAT MANY CONSUMERS ARE PRICE SENSITIVE TO PHONES AS WELL. THIS STUDY USED
SEVERAL LEVELS OF PHONE PRICES COMBINED WITH CONTRACT TERMS AS WELL AS PURCHASING A PHONE
OUTRIGHT WITHOUT A BINDING CONTRACT. IT SHOULD BE KNOWN THAT MANY PEOPLE FEEL THAT THE
STANDARD TWO-YEAR CONTRACT IN BETWEEN PHONE UPGRADES IS VIEWED AS RESTRICTIVE AND PROBLEMATIC
FOR MANY PEOPLE.
PHONES SERVE MORE FUNCTIONS THAN SENDING TEXTS, EMAILS, AND MAKING PHONE CALLS THESE DAYS.
PEOPLE USE THEM AS PORTABLE MUSIC PLAYERS, DAILY PLANNERS, ENTERTAINMENT, AND SOCIAL DEVICES AS
WELL. THIS REQUIRES INCREASED ON BOARD STORAGE. THE TRADITIONAL 16 TO 32 GIGABITS OF STORAGE IS
VIEWED AS A BARE MINIMUM, AND CONSUMERS WOULD LIKE TO SEE PHONES INCREASE THEIR CAPACITY.

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WHAT IS CONJOINT ANALYSIS?
CONJOINT ANALYSIS IS A DATA-DRIVEN CONSUMER INSIGHT TOOL THAT SHOWS THE RELATIVE VALUE THAT
CONSUMERS ASSIGN TO VARIOUS FEATURES AND LEVELS OF A PRODUCT OR SERVICE. SIMPLY STATED CONJOINT
ANALYSIS BREAKS PRODUCTS DOWN INTO INDIVIDUAL FEATURES TO DETERMINE THE UTILITY OR “HAPPINESS”
THAT CONSUMERS RECEIVE FROM THAT FEATURE. FOR THE PURPOSE OF CONJOINT ANALYSIS IT IS IMPORTANT
THAT YOU VIEW PRODUCTS AS A CONGLOMORATE OF FEATURES.
WHY USE CONJOINT ANALYSIS?
CONJOINT ANALYSIS IS A VERY HELPFUL MARKETING TOOL IN A VARIETY OF SITUATIONS. ONE OF THE FIRST
REASONS CONJOINT ANALYSIS SHOULD BE CONSIDERED IS TO LAUNCH NEW PRODUCTS OR SERVICES. A
CONJOINT STUDY CAN IDENTIFY THE APPROPRIATE FEATURE SET TO ATTRACT CONSUMERS PRIOR TO
DEVELOPMENT AND RELEASE. IT WILL ALSO HELP CALCULATE PRICE SENSITIVITY AND TARGET PRICE FOR A NEW
PRODUCT OR LINE EXTENSION. FURTHERMORE; CONJOINT ANALYSIS CAN ASSIST IN TAKING THE APPROPRIATE
REACTIONARY MESSURES TO A COMPETITORS PRODUCT/LAUNCH STRATEGY. AND LASTYLY IT CAN HELP IDENTIFY
THE BREAK EVEN NUMBERS IN ORDER TO JUSTIFY THE CREATION, MANUFATURING, AND LAUNCH OF A NEW
PRODUCT OR SERVICE. MANY INDUDSTRY PROFESSIONALS BELIVE THAT CONJOINT ANALYSIS IS ONE OF THE
MOST POWERFUL MARKTING TOOLS CURRENTLY AVAILABLE TO COMPANIES.
WHAT ASSUMPTIONS MUST WE MAKE?
IN ORDER TO PROPERLY CONDUCT A CONJOINT ANALYSIS RESEARCH STUDY THERE ARE THREE
ASSUMTIONS YOU NEED TO MAKE.
EVERY PRODUCT IS A BUNDLE OF FEATURES AND NOTHING MORE THAN THAT. THIS ASSUMPTION IS
IMPORTANT BECAUSE PEOPLE DON’T BUY PRODUCTS; THEY BUY A JOB THAT NEEDS TO BE DONE. THE
OVERALL QUALITY OF THAT JOB IS CREATED BY THE FEATURES AND LEVELS OF FEATURES AVAILABLE IN
THE PRODUCT. “WE DON’T BUY A DRILL, WE BUY THE HOLE THAT IT MAKES”
BY CHANGING A SINGLE FEATURE OR FEATURE LEVEL YOU CREATE AN ENTIRELY NEW PRODUCT. A
GOLD IPHONE IS NOT THE SAME AS A GREY IPHONE. WHILE THEY SERVE THE EXACT SAME FUNCTION
AND MAY BE IDENTICAL IN ALL OTHER FEATURE LEVELS THEY ARE ENTIRELY DIFFERENT PRODUCTS.
SIMILAR TO THE SECOND ASSUMPTION, A CHANGE IN A SINGLE PRODUCT FEATURE OR LEVEL
COMPLETELY CHANGES CONSUMER PREFERENCES. USING CELL AS AN EXAMPLE AGAIN, A SAMSUNG
GALAXY NOTE WITH 16 GIGABITS OF STORAGE MAY BE APPEALING TO ONE PERSON WHILE ANOTHER
PERSON IS ONLY INTERESTED IN THE SAME PHONE WITH 64 GIGABITS OF STORAGE. A CHANGE IN
FEATURE LEVEL CAN CHANGE THE JOB TO BE DONE AND THE CONSUMER PREFERENCE TOWARDS THAT
PRODUCT.

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HOW IS A CONJOINT ANALYSIS RESEARCH STUDY CONDUCTED?
CONJOINT ANALYSIS IS CONDUCTED IN A SERIES OF FIVE STEPS THAT ARE CLEARLY DESCRIBED BELOW, AS WELL
AS REFERENCED IN THE APPENDIX SECTION OF THE REPORT.
STEP 1: DEFINE THE CORE PRODUCT AND IDENTIFY RELEVANT FEATURES AND LEVELS:
DEFINING THE CORE PRODUCT IS THE FIRST STEP IN CONDUCTING A CONJOINT ANALYSIS RESEARCH STUDY. AS
STATED IN THE ASSUMPTIONS SECTION, A PRODUCT IS A SET OF FEATURES AT SPECIFIC LEVELS. WITH THAT
BEING SAID, DEFINING THE CORE PRODUCT RELIES ON OUR ABILITY TO IDENTIFY THE RELEVANT FEATURES AND
LEVELS. AN IMPORTANT ASPECT IN IDENTIFIYING THE RELEVANT FEATURES IS THAT THEY SHOULD BE
DIFFERENTIATING. TEST THE FEATURES THAT SET YOUR PRODUCT/SERVICE APART FROM YOUR COMPETITORS.
BY TESTING THESE FEATURES YOU WILL BE ABLE TO IDENTIFY WHERE YOU HAVE A COMPETITIVE ADVANTAGE
AND HOW TO LEVERAGE YOUR CORE COMPENTISIES.
WHEN SELECTING THE FEATURES YOU WISH TO TEST BE SURE TO LIMIT THE NUMBER TO AROUND SEVEN.
PSYCHOLOGY HAS PROVEN THAT HUMANS CAN ONLY HOLD ABOUT FIVE (PLUS OR MINUS TWO) PIECES OF
INFORMATION IN THEIR BRAIN AT ONE TIME. OVER COMPLICATING THE PRODUCT WITH DOZENS OF FEATURES
WILL CONFUSE RESPONDANTS AND HINDER THE QUALITY OF THE RESEARCH. GIVE EACH FEATURE THREE
LEVELS; MAXIMUM, MINIMUM, AND MIDPOINT. THIS WILL ALLOW FOCUS GROUPS AND SURVEY RESPONDANTS
TO TELL YOU WHAT FEATURES AND LEVELS WOULD MOST INSPIRE THEM TO SWITCH BRANDS, SERVICES, OR
CATEGORIES.
Refer to Exhibit1
STEP 2: DEFINE THE NATURE OF STIMULI AND CREATE PRODUCT PROFILES.
WE CREATE PRODUCT PROFILES USING THE FEATURES AND LEVELS DEFINED IN STEP ONE. HOWEVER, WITH
SEVEN FEATURES AND THREE LEVELS OF EACH FEATURE THE TOTAL NUMBER OF POSSIBLE PROFILE
COMBINATIONS IS EQUAL TO 2187 (THREE TO THE POWER OF 7). ASKING SURVEY RESPONDANTS TO
RATE/RANK THIS NUMBER OF PROFILES IS COSTLY AND WOULD RESULT IN POOR DATA. IN ORDER TO SIMPLIFY
THE PROCESS WE USE A TOOL CALLED THE ORTHOGONAL EXPERIMENTAL DESIGN. THIS SIMPLE MATRIX OF
ZEROS AND ONES HELPS US CREATE 18 PRODUCT PROFILES THAT WILL SIMULATE ALL 2187 POSSIBLE
COMBINATIONS.
PROFILES CAN REPRESENT PRODUCTS IN ANY PHAZE OF THE PRODUCTION PROCESS, FROM ACTUAL FINAL
PRODUCTS TO PROTOTYPES AND CONCEPTS. THE FURTHER ALONG THE PRODUCT IS IN THIS PROCESS THE MORE
TIME, MONEY, AND RESOURCES WILL HAVE BEEN USED. A CONJOINT STUDY OF A FINAL PRODUCT WILL RESULT

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IN VERY ACCURATE SURVEY RESULTS, BUT IT MAY ALSO PROVE THAT CONSUMERS ARE NOT KEEN ON THE
FEATURES AVAILABLE.
FINALLY, THERE ARE TWO WAYS IN WHICH YOU CAN ASK INDIVIDUALS TO EVALUATE PRODUCT PROFILES. IF
THERE ARE LESS THAN TEN PROFILES YOU CAN USE A RANKING SYSTEM AND HAVE THEM SIMPLY RANK EACH
PROFILE FROM 1 TO 10. IF THERE ARE MORE THAN TEN PROILES IT IS MORE EFFICIENT TO ASK THEM TO RATE
THE PROFILES BASED ON THEIR “INTENT TO PURCHASE”. USING THIS METHOD PROVIDES BETTER RESULTS WITH
LARGER NUMBER OF PROFILES BECAUSE RESPONDANTS DO NOT NEED TO REMEMBER EVERY PROFILE AS THEY
CONTINUE THE SURVEY.
Refer to exhibit2
STEP 3: CHOOSE AND LIST RELEVANT SUBSETS OF PRODUCT COMBINATIONS
IN ORDER TO CREATE THE 18 PROFILES NEEDED TO SIMULATE THE 2187 POSSIBLE COMBINATIONS WE USE THE
ORTHOGONAL EXPERIMENTAL DESIGN (OED). THE DESIGN IS A 14 X 18 MATRIX THAT USES A SPECIFIC CODE
TO IDENTIFY THE PRODUCT COMBINATIONS NEEDED FOR EVALUATION. ONE ATTRIBUTE IS DROPPED FROM EACH
FEATURE TO SIMPLIFY THE CODING, BUT WILL BE ACCOUNTED FOR BY A 0,0 CODE FOR THAT INDIVIDUAL
FEATURE. IN THIS SPECIFIC SURVEY X1 = PRICE OF PHONE = $250 AND X2 = PRICE OF PHONE = 500. EACH
FEATURE LEVEL TAKES A VALUE OF EITHER 0 OR 1. X1 = 1 MEANS THAT THE PRICE OF THE PHONE IS $250. X2
= 1 MEANS THE PRICE OF THE PHONE EQUALS $500. A CODE OF X1 =0 AND X2 = 0 MEANS THE PRICE OF THE
PHONE IS $750 (THE MISSING FEATURE LEVEL). USING THIS CODE EACH OF THE 18 PROFILES ARE CREATED TO
BE TESTED BY CONSUMERS.
For a more detailed look at the orthogonal experimental design, the interpretation of the code, and a sample
profilepleaserefer to exhibits 2,3, and 4
STEP 4: PRESENT PROFILES BY OBTAINING PREFERENCES DATA AND FEILDING A LARGE-SAMPLE SURVEY
AFTER GAINING AN UNDERSTANDING OF THE OED AND THE CODE INTERPRETATION IT IS NOW TIME TO CREATE
ALL 18 PROFILES. UNFORTUNATELY THIS MUST BE DONE BY HAND, AND IT IS VERY TIME CONSUMING. BE VERY
CAREFUL TO ACCURATELY READ THE OED BECAUSE, ONE MISPLACED FEATURE LEVEL WILL DISTURB THE
FINDINGS OF THE SURVEY.
HAVE EACH RESPONDANT RATE THE PROFILES ON A SCALE OF 1 TO 7. ONE (1) WILL REPRESENT “DEFFINITLY
NEVER PURCHASE” AND SEVEN (7) WILL BE THE OPPOSITE “DEFFINITLY WILL PURCHASE”.
Refer to exhibit2 for more information on ratingand to view a sampleprofile

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STEP 5: ANALYZE DATA AND INTERPRET OUTPUT
THE FIRST STEP IN ANALYZING THE DATA IS TO RUN A REGRESSION REPORT USING MICROSOFT EXCEL. (IF YOU
ARE USING AN APPLE COMPUTER YOU WILL NEED TO DOWNLOAD THIRD PARTY SOFTWARE TO PREFORM THIS
TASK).
THERE ARE THREE MAIN NUMBERS THAT YOU NEED TO PAY ATTENTION TO AFTER RUNNING YOUR REGRESSION
REPORT. THE FIRST IS THE “SIGNIFICANCE OF F” VALUE. THIS IS THE CONFIDENCE INTERVAL, OR THE
PRECENTAGE OF TIMES YOUR DATA WILL BE INCORRECT. A SIGNIFICANCE LEVEL OF .05 IS IDEAL, THIS WOULD
MEAN THAT 95% OF THE TIME YOUR DATA WILL ACCURATLY REPRESENT THE POPULATION. THE NEXT
IMPORTANT VALUE IS THE “ADJUSTED R SQUARED” FIGURE. ADJUSTED R SQURED REPRESENTS THE TOTAL
AMOUNT OF VARIANCE EXPLAINED BY YOUR DATA. THE CLOSER THIS NUMBER IS TO ONE (1) THE MORE
RELIABLE YOUR DATA IS. LASTLY YOU NEED TO PAY ATTENTION TO YOUR “COEFFICIENTS AND INTERCEPT”
NUMBERS. THESE ARE THE UTILITY/HAPPINESS VALUES ATTRIBUTED TO EACH FEATURE LEVEL TESTED IN THE
SURVEY.
AFTER IDENTIFYING THE IMPORTANT NUMBERS WE NEED TO RESCALE THE COEFFICIENTS. AS YOU MAY NOTICE
THERE ARE NEGATIVE AND POSITIVE NUMBERS IN THE REGRESSION OUTPUT. NEGATIVE NUMBERS ARE NOT
USER FRIENDLY SO WE RESCALE TO A ZERO TO ONE MODEL. IN ORDER TO RESCALE USE THE FORMULA BELOW.
RESCALED COEFFICIENT = (ORIGNIAL COEFF - LOWEST COEFF.) / (HIGHEST COEFF –LOWEST COEFF)
Refer to exhibits 5,6, 7, and 8 for more detailed information on the analysis process
CREATING THE CONJOINT ANLAYSIS BAR CHART:
USE A COMBINATION OF MICROSOFT EXCEL AND POWERPOINT TO CREATE A BAR CHART OF FEATURE LEVEL AND
IMPORTANCE.
Refer to exhibit9
MANAGERIAL OUTPUTS FROM CONJOINT ANALYSIS
DETERMINE FEATURE IMPORTANCE:
ORGANIZING THE BAR CHART BY FEATURE IMPORTANCE IS KEY TO UNDERSTANDING CUSTOMER UTILITY OR
“HAPPINESS” ASSOCIATED WITH THE FEATURES AND LEVELS WITHIN THOSE FEATURES. ON A SCALE FROM ZERO
TO ONE, ONE BEING TOTALLY HAPPY AND ZERO BEING NOT HAPPY AT ALL, IT IS EASY TO IDENTIFY WHICH
FEATURES CUSTOMERS PRIORITIZE WHEN MAKING PURCHASE DECISIONS.
A detailed accounton how to calculatefeature importanceis described in the bottom portion of exhibit9

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BETTER UNDERSTAND THE CUSTOMER VALUE STRUCTURE:
THE DISTANCE EACH BAR ON THE CHART TRAVELS TO THE RIGHT IS SIGNIFICANT. THE FURTHER TO THE RIGHT
THE MORE THAT LEVEL OF THAT SPECIFIC FEATURE IS VALUED. WITHIN EACH FEATURE YOU CAN SEE BOTH
LINEARITY AND NON-LINEARITYS. LINEARITY REFERES TO THE RANGE BETWEEN FEATURE LEVELS. IF THE ENDS
OF BARS CAN BE CONNECTED WITH A STRIAGHT LINE IT SHOWS THAT THE CUSTOMERS PERCEPTION OF VALUE
DECLINES PROPORTIONALY WITH THE LEVEL OF THE FEATURE. NON-LINEARITY OCCURS WHEN THERE IS NO
STRAIGHT LINE BETWEEN FEATURE LEVELS, AND THIS REPRESENTS A STRONG CUSTOMER OPINION, OR
PREFERENCE, TO THAT SPECIFIC FEATURE LEVEL.
Refer to exhibit10 for more detail
FIND THE BEST PRODUCT BASED ON TOTAL UTILITY:
THE FEATURE COMBINATION RESULTING IN THE CUSTOMERS OPTIMAL PRODUCT IS THE ONE WITH THE HIGHEST
TPU, OR TOTAL PRODUCT UTILITY. THIS PRODUCT CAN BE IDENTIFIED BY SELECTING THE LEVEL OF EACH
FEATURE WITH THE HIGHEST COEFFIECIENT. GENERALLY THIS PRODUCT WILL NOT BE PRACTICAL FOR THE
COMPANY TO MAKE BASED ON COST, RESOURCES, AND EFFICIENCY RESTRICTIONS, BUT IT PROVIDES AN
EXCELLENT STARTING POINT TO CREATE A PRODUCT THAT IS BOTH PROFITABLE AND DESIREABLE.
See exhibit13 for calculation of the highestand lowest TPU products
CALCULATE MARKET SHARE:
AFTER IDENTIFYING THE CUSTOMERS OPTIMAL PRODUCT YOU WILL NEED TO CREATE YOUR OWN “REALISTIC
OPTIMAL PRODUCT”. USING THIS NEW TPU AND THE TPU FOR YOUR CURRENT PRODUCT (IF THERE IS ONE)
YOU CAN CREATE MARKET SHARE INFORMATION BASED ON THE CUSTOMERS WILLINGNESS TO PURCHASE. THE
FORMULA FOR CALCULATING MARKET SHARE IS DIAGRAMED BELOW
MARKET SHARE = E^(TPU OF YOUR PRODUCT)/ (E^TPU OF YOUR PRODUCT + E^TPU COMPETITORS)
See exhibit14, 15 and 16 for more information on market sharecalculations
SIMULATE MARKET SHARE AND PROFITABILITY:
AFTER CALCULATING MARKETSHARE FOR YOURSELF AND YOUR COMPETITORS IT IS HELPFUL TO CREATE A PIE
CHART IN ORDER TO GET A VISUAL REPRESENTAION OF THE MARKET PLACE. ALSO, BY USING POWERPOINT AND
EXCEL, IT BECOMES EASY TO RECALCULATE MARKETSHARE BASED ON CHANGES IN YOUR PRODUCT OR
COMPETITORS PRODUCTS. WHILE THIS IS JUST AN ESTIMATE OF ACTUALL MARKET SHARE, STATISTICS AND REAL
WORLD APPLICATION HAVE PROVEN IT TO BE EXTREMELY ACCURATE.
See exhibit15 and 16 for more information

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IDENTIFY BARRIER TO ENTRY:
ON YOUR REGRESSION REPORT YOU MAY HAVE NOTICED A NUMBER THAT WE HAVE NOT YET SPOKEN ABOUT,
THE INTERCEPT. THE INTERCEPT REPRESENTS THE MINIMUM TPU LEVEL OF THE INDUSTRY, AND CAN BE
REFERED TO AS THE BARRIER TO ENTRY. THE HIGHER THE INTERCEPT THE MORE MATURE AN INDUSTRY IS
WHICH DRIVES THE BARRIER TO ENTRY UP AS WELL.
STRENGTHS AND WEAKNESSES OF CONJOINT ANALYSIS
CONJOINT ANALYSIS IS A VERY POWERFUL AND ACCURATE TOOL. IT CAN BE USED TO IDENTIFY KEY PRODUCT
FEATURES THAT CUSTOMERS FIND MOST IMPORTANT, POSITION A PRODUCT FAVORABLY IN CUSTOMER
PERCEPTIONS, AND CALCUATE MARKET SHARE, AMOUNG OTHER THINGS. IDENTIFYING WHAT DRIVES
PURCHSAE BEHAVIOR AND CREATES CUSTOMER HAPPINESS IS KEY TO ANY SUSTAINABLE BUSINESS MODEL.
ONE DOWNFALL OF CONJOINT ANALYSIS IS THAT IT CANNOT BE USED TO EVALUATE BRAND NEW PRODUCTS OR
SERVICES. THERE HAS TO BE A BENCH MARK OR PRE-EXISTING PRODUCT FOR CONJOINT TO ACCURATLY ASSESS
THE FEATURES ASSOCIATED WITH IT. ALSO CONJOINT ANLYSIS RELIES HEAVILY ON THE ACCURACY OF FOCUS
GROUPS AND LARGE SAMPLE SURVEYS. ANY MISREPRESENTATION OR MISINTERPRETATION CAN LEAD TO
INACCURATE DATA.
RECOMMENDATIONS FOR SAMSUNG GALAXY S6:
BASED ON THE CONJOINT ANALYSIS RESEARCH STUDY PREFORMED AS WELL AS THE MARKETSHARE AND
PROFITABILITY SIMULATIONS IT IS MY RECOMMENDATION THAT SAMSUNG TAKES FOUR ACTIONS TO INCREASE
PROFITABILITY AND MARKET SHARE.
INCREASE THE OVERALL BATTERY LIFE OF THE PHONE. CUSTOMERS WANT PHONES THAT HAVE A “CALL TIME”
BATTERY LIFE OF NINE OR MORE HOURS. INCREASING BATTERY LIFE SIGNIFICANLY INCREASES CUSTOMER
HAPPINESS AND UTILITY
MAKE THE SAMSUNG GALAXY S6 AVAILABLE ON ALL SERVICE PROVIDERS. LIMITING THE PROVIDERS THAT CAN
CARRY THIS PHONE IS LIMITING THE NUMBER OF POTENTIAL CUSTOMERS. MANY CUSTOMERS ARE TIED INTO
LENGHTY CONTRACTS, AND THE COST TO LEAVE OUTWEIGHS THE BENEFITS GAINED FROM THE PHONE.
INCREASE THE AMOUNT OF ON BOARD STORAGE AVAILABLE ON THE PHONE. PEOPLE ARE USING THEIR PHONES
FOR MORE THAN MAKING CALLS AND SENDING TEXTS THIS REQUIRES ADDITIONAL STORAGE SPACE.

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REDUCE THE PRICE. THE CELLPHONE MARKET IS FLOODED WITH COMPETITION AND SPECIAL OFFERS. WHILE
WE UNDERSTAND PROFITABILITY IS THE MOST IMPORTANT ASPECT TO A THRIVING BUSINESS, WE BELIEVE THAT
THE INCREASE IN MARKET SHARE WILL MAKE UP FOR THE DECREASE IN PRICE.
See exhibit16 for recalculation of market shareinformation
APPENDIX:
EXHIBIT 1: 7 FEATURES 3 LEVELS
1 PRICE $250/2YEAR $500/1YEAR $750/NO CONTRACT
2 CAMERA 8 MEGAPIXELS 12 MEGAPIXELS 16 MEGAPIXELS
3
BATTERY LIFE (CALL
TIME)
3 HOURS 6 HOURS 9 HOURS
4 STORAGE 16 GIGABITS 32 GIGABITS 64 GIGABITS
5 SCREEN SIZE 4.3 INCHES 4.7 INCHES 5.5 INCHES
6 DISTRIBUTION ONLINE RETAIL OUTLET CARRIER STORE
7 NETWORK CARRIER AT&T VERIZON T-MOBILE
THIS BASIC TEMPLATE GIVES US THE FEATURES AND LEVELS OF EACH FEATURE THAT WILL MAKE UP THE PROFILES
THAT CONSUMERS WILL JUDGE. USING THIS TEMPLATE AND THE ORTHOGONAL EXPERIMENTAL DESIGN WE ARE
ABLE TO EVALUATE ALL 2187 PROFILE COMBINATIONS USING ONLY 18 VARIATIONS. THIS ALLOWS FOR SURVEY
TAKERS TO SPEND LESS TIME AND GIVE MORE ACCURATE RESPONSES.

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EXHIBIT 2: THE BASIC PROFILE
PRICE $750/NO CONTRACT
CAMERA 16 MEGAPIXEL
BATTER LIFE (CALL TIME) 9 HOURS
STORAGE 64 GIGABITS
SCREEN SIZE 5.5 INCHES
DISTRIBUTION NETWORK CARRIER
NETWORK T-MOBILE
THIS PROFILE IS A VISUAL REPRESENTATION OF WHAT CONSUMERS SAW IN THE SURVEY. IT IS IDENTICAL TO THE
FIRST PROFILE MAPPED OUT BY THE ORTHOGONAL EXPERIMENTAL DESIGN TEMPLATE. CONSUMERS WILL RATE
THIS PROFILE ON A SCALE OF 1-7 (1 BEING “DEFINITELY WILL NOT PURCHASE AND 7 BEING “DEFINITELY WILL
PURCHASE”)
EXHIBIT 3: HOW TO READ THE CODE
PRICE
X1 = 0,1 (0 = NOT “$250/2YEAR”, 1 = “$250/2YEAR”)
X2 = 0,1 (0 = NOT “$250/2YEAR”, 1 = “$500/1YEAR”)
CAMERA
X3 = 0,1 (0 = NOT “8 MEGAPIXELS”, 1 = “8 MEGAPIXELS”)
X4 = 0,1 (0 = NOT “12 MEGAPIXELS”, 1 = “12 MEGAPIXELS”)
BATTERY LIFE (CALL TIME)
X5 = 0,1 (0 = NOT “3 HOURS”, 1 = “3 HOURS”)
X6 = 0,1 (0 = NOT “6 HOURS”, 1 = “6 HOURS”)

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STORAGE
X7 = 0,1 (0 = NOT “16 GIGABITS”, 1 = “16 GIGABITS”)
X8 = 0,1 (0 = NOT “32 GIGABITS”, 1 = “32 GIGABITS”)
SCREEN SIZE
X9 = 0,1 (0 = NOT “4.3 INCHES”, 1 = “4.3 INCHES”)
X10 = 0,1 (0 = NOT “4.7 INCHES”, 1 = “4.7 INCHES”)
DISTRIBUTION
X11 =0,1 (0 = NOT “ONLINE”, 1 = “ONLINE”)
X12 = 0,1 (0 = NOT “RETAIL”, 1 = “RETAIL”)
NETWORK CARRIER
X13 = 0,1 (0 = NOT “AT&T”, 1 = “AT&T”)
X14 = 0,1 (0 = NOT “VERIZON”, 1 = “VERIZON”)
NOTE: YOU MAY NOTICE THAT THERE ARE ONLY 14 OF THE 21 ATTRIBUTE LEVELS LISTED IN THIS EXAMPLE. A
CODE WITH 0,0 AS THE INPUT REPRESENTS THE MISSING FEATURE LEVEL FOR EACH OF THE 7 ATTRIBUTES.
EXAMPLE: IF BOTH THE X1 AND X2 (PRICE) VALUES WERE 0 THAT PROFILE WOULD REPRESENT A PHONE WITH
THE PRICE OF $750/NO CONTRACT.

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EXHIBIT 4: THE ORTHOGONAL EXPERIMENTAL DESIGN CODE SHEET
THIS PRE-WRITTEN CODE SHEET IS THE KEY TO CREATING THE EXACT PROFILES THAT ENABLES US TO EVALUATE
ALL 2187 FEATURE COMBINATIONS USING ONLY 18 PROFILES. BY UTILIZING THIS TOOL WE INCREASE THE
NUMBER OF WILLING SURVEY PARTICIPANTS. IT ALSO ALLOWS US TO CUT COST AND MAXIMIZE OPERATIONAL
EFFICIENCY.

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EXHIBIT 5: ENTERING THE DATA
AS YOU RECEIVE FEEDBACK/RESULTS FROM YOUR SURVEY YOU WILL NEED TO ENTER THE DATA INTO EXCEL. AS
YOU CAN SEE COLUMN A IS LIKELIHOOD OF PURCHASE FOR EACH OF THE 18 PROFILES CREATED ON A 1 TO 7
SCALE. THE NEXT 14 COLUMNS REPRESENT FEATURE LEVELS AND THE CODE FROM THE ORTHOGONAL
EXPERIMENTAL DESIGN. THIS IS THE PROPER FORMAT REQUIRED TO RUN THE REGRESSION REPORT OUTLINED IN
THE NEXT EXHIBIT.

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EXHIBIT 6: REGRESSION REPORT AND KEY FACTORS
WHEN YOU RUN THE REGRESSION REPORT THERE ARE A FEW KEY STEPS YOU MUST TAKE TO INSURE QUALITY
OUTPUT. WHEN ASKED TO INPUT THE Y AND X RANGE BE SURE THAT YOU USE THE CORRECT DATA. THE “Y”
RANGE IS THE FIRST COLUMN CONSISTING OF THE INDIVIDUAL RATINGS FROM THE SURVEY PARTICIPANTS. ALSO
BE SURE TO INCLUDE THE TITLE “RATINGS” ALONG WITH THE DATA. THE “X” RANGE IS THE REST OF DATA
INCLUDING THE HEADINGS OF X1, X2, X… LASTLY MAKE SURE THAT YOU CHECK THE BOX TITLED “LABELS”,
AND “NEW WORKSHEET IS SELECTED IN THE OUTPUT OPTIONS SECTION OF THE REGRESSION WINDOW.

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WHEN READING YOUR REGRESSION OUTPUT THERE ARE THREE NUMBERS THAT YOU SHOULD PAY CLOSE
ATTENTION TO. THE FIRST, AND MOST IMPORTANT, IS THE “SIGNIFICANCE OF F” NUMBER THAT IS
HIGHLIGHTED ON THE ABOVE DIAGRAM. THIS REPRESENTS THE CONFIDENCE LEVEL OF THE SURVEY. IN SIMPLE
TERMS FOR THIS EXHIBIT, THE NUMBER .209 SAYS THAT YOU CAN BE CONFIDENT THIS DATA IS ACCURATE 79%
OF THE TIME. (1-.209 = .791 OR 79.1%) TYPICALLY YOU WOULD LIKE A SIGNIFICANCE OF F LEVEL TO BE
BELOW .05, WHICH WOULD REPRESENT A CONFIDENCE LEVEL OF 95%
THE ADJUSTED R SQUARED NUMBER IS THE SECOND OUTPUT YOU SHOULD LOOK AT. THIS NUMBER TELLS YOU
HOW WELL THE VARIABLES IN THE ANALYSIS FIT THE REGRESSION MODEL. SIMPLY STATED IT TELLS YOU HOW
WELL THEY FIT ONTO THE REGRESSION LINE. GENERALLY A LOW R SQUARED NUMBER IS BETTER.
LASTLY YOU NEED TO LOOK AT YOUR COEFFICIENTS. THESE ARE THE NUMBERS THAT WILL ULTIMATELY BE USED
TO PLOT THE BAR CHART THAT INDICATES CONSUMERS’ LEVEL OF HAPPINESS OR IMPORTANCE WHEN
PURCHASING YOUR PRODUCT OR SERVICE.
NOTE: TO RUN THE REGRESSION REPORT YOU WILL NEED TO ACTIVATE THE “ANALYSIS TOOL PACK” IN
MICROSOFT EXCEL, OR DOWNLOAD ADDITIONAL THIRD PARTY DATA FOR APPLE PRODUCTS.
ALSO PLEASE REALIZE THAT THE SAMPLE SIZE OF THIS SURVEY THE NUMBERS IN THE ANALYSIS DO NOT
REPRESENT THE POPULATIONS BELIEF TOWARD THIS PRODUCT/SERVICE. UPON GATHERING MORE DATA THE
NUMBERS WILL BE MORE ACCURATE AND THE SIGNIFICANCE LEVEL WILL BE WITHIN THE STATISTICAL NORM.

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EXHIBIT 7: RESCALING THE COEFFICIENTS
IN ORDER TO MAKE YOUR BAR GRAPH IT IS IMPORTANT TO RESCALE AND REORDER YOUR COEFFICIENTS. IN
ORDER TO DO THIS YOU WILL NEED TO MANUALLY INPUT THE SEVEN FACTOR LEVELS THAT WERE OMITTED FROM
THE REGRESSION ANALYSIS. LABEL THESE X15 – X21 AND GIVE THEM COEFFICIENT LEVELS OF 0. (THIS WILL
NOT AFFECT THE QUALITY OF YOUR DATA)
THE FORMULA FOR RESCALING IS SIMPLE. FIRST YOU CALCULATE THE RANGE BY IDENTIFYING THE HIGHEST AND
LOWEST COEFFICIENT LEVELS. IN OUR EXAMPLE THAT IS THE INTERCEPT AT A VALUE OF 3.56 AND X5 AT A
VALUE OF -1.06. THE RANGE IS THEN EQUAL TO (3.56 - -1.06) = 4.63.
AFTER IDENTIFYING THE RANGE THE FORMULA FOR RESCALING IS AS FOLLOWS. (ORIGINAL COEFFICIENT –
LOWEST COEFFICIENT) / RANGE. BY APPLYING THIS TECHNIQUE YOU WILL ELIMINATE NEGATIVE COEFFICIENTS
AND CREATE A UTILITY SCALE BETWEEN 0 AND 1. THIS MAKES THE BAR CHART MUCH MORE USER FRIENDLY FOR
CLIENTS AND PRESENTERS.

18
EXHIBIT 8: RENAMING AND ORGANIZING COEFFICIENTS
IN ORDER TO BUILD THE BAR CHART IT IS IMPORTANT TO RENAME THE COEFFICIENTS SO THAT THEY REPRESENT
THE FEATURE LEVEL ASSIGNED TO THEM. AFTER COMPLETING THE RENAMING PROCESS, REGROUP THE
FEATURES INTO THEIR RESPECTIVE GROUPS. THIS WILL ALLOW YOU TO MORE EASILY MAKE THE BAR CHART AS
WELL AS SEE THE RELATIONSHIPS BETWEEN FEATURE LEVELS AND THE CONSUMER UTILITY ASSIGNED TO EACH OF
THEM.

19
EXHIBIT 9: CREATING THE BAR CHART
CREATE THE BAR CHART USING MICROSOFT POWER POINT AND EXCEL. IT IS ALSO HELPFUL TO COLOR CODE
YOUR FEATURES AND ARRANGE THEM BASED ON UTILITY LEVEL TO THE CUSTOMERS. IN ORDER TO FIND THE
MOST IMPORTANT FEATURES YOU WILL NEED TO FOLLOW THESE STEPS
 CALCULATE EACH FEATURES RANGE (HIGHEST UTILITY – LOWEST UTILITY)
 FIND THE SUM OFF ALL FEATURE RANGES.
 THIS IS REFERRED TO AS THE SUPER SUM
 DIVIDE INDIVIDUAL FEATURE RANGES BY THE SUPER RANGE
 THIS GIVES YOU THE IMPORTANCE OF EACH FEATURE BASED ON CUSTOMER ATTITUDES.
NOTE: THIS CAN BE EASILY DONE IN EXCEL. REFER TO THE CHART ON THE NEXT PAGE FOR AN EXAMPLE.

20
EXHIBIT 10: LINEARITY V. NON-LINEARITY
LINEARITY REFERS TO THE CONSUMER PERCEPTION OF THE FEATURE LEVELS. AS YOU CAN SEE, CONSUMERS
ATTITUDES TOWARDS THE AMOUNT OF STORAGE AVAILABLE ON A PHONE FOLLOWS A STRAIGHT LINE. THIS
0 0.2 0.4 0.6 0.8 1 1.2
Intercept
3 hour
6 hour
9 hour
ATT
Verizon
t mobile
250 price
500 price
750 price
online
retail
carrier
16 g storage
32 g storage
64 g storage
4.3 screen
4.7 screen
5.5 screen
8x camera
12x camera
16x camera
Linearity
Non-Linearity

21
IMPLIES THAT THE AMOUNT OF HAPPINESS/UTILITY INCREASES OR DECREASES PROPORTIONALLY THROUGH THE
LEVELS OF THAT ATTRIBUTE. IN OTHER WORDS, THEIR FEELINGS ABOUT STORAGE ARE RATIONAL.
THE NON-LINEARITY SEEN IN THE PRICE COLUMN SUGGESTS THAT CONSUMERS’ BELIEFS AND ATTITUDES
TOWARDS PRICE ARE NOT RATIONAL. THE TRADE OFF BETWEEN $250 AND $500 FOR A PHONE IS
SIGNIFICANTLY LESS THAN THE TRADE OFF BETWEEN $500 AND $750. THIS ALSO SUGGESTS THAT CONSUMERS
ARE PRICE SENSITIVE, AND THIS WILL HAVE AN IMPACT ON THEIR PURCHASE BEHAVIOR.
EXHIBIT 11: SWEET SPOTS
A SWEET SPOT REPRESENTS AN AREA WHERE THE BUSINESS IS AT A SIGNIFICANT ADVANTAGE. THEY VISUALLY
SHOW WHERE THE CONSUMER IS WILLING TO PAY MORE MONEY FOR LESS SERVICE OR PRODUCT FEATURES. IN
THIS CASE THE SURVEY RESPONDENTS HAVE IDENTIFIED THAT THEY PREFER PHONES WITH “MEDIUM” SIZED
SCREENS TO THOSE WITH LARGER SCREENS. USING THIS INFORMATION WE CAN CUT COSTS FROM MATERIALS,
PRODUCTION, AND EVEN PRODUCT LINES. UNDERSTANDING THE CONSUMER PREFERENCES AND THE “JOBS TO
BE DONE” THEY ARE TRYING TO ACCOMPLISH IS VITAL TO COMPANY GROWTH.
0 0.2 0.4 0.6 0.8 1 1.2
Intercept
3 hour
6 hour
9 hour
ATT
Verizon
t mobile
250 price
500 price
750 price
online
retail
carrier
16 g storage
32 g storage
64 g storage
4.3 screen
4.7 screen
5.5 screen
8x camera
12x camera
16x camera
Sweet Spot

22
EXHIBIT 12: TRADEOFFS
TRADE OFFS EXIST WHEN TWO FEATURE LEVELS PROVIDE THE SAME AMOUNT OF UTILITY TO A CUSTOMER. THE
GENERAL RULE IS THAT THEY SHOULD BE WITHIN A .1 MARGIN OF EACH OTHER. IN THIS EXAMPLE THE
CUSTOMER UTILITY FOR A 5.5-INCH SCREEN, 64 GIGABITS OR STORAGE, AND PURCHASING FROM A CARRIER
OPERATED STORE ALL HAVE THE SAME AMOUNT OF VALUE TO THE CUSTOMER. THIS MEANS THAT THEY CAN BE
INTERCHANGED WITH EACH OTHER WITHOUT DISRUPTING THE CONSUMERS’ HAPPINESS.
0 0.2 0.4 0.6 0.8 1 1.2
Intercept
3 hour
6 hour
9 hour
ATT
Verizon
t mobile
250 price
500 price
750 price
online
retail
carrier
16 g storage
32 g storage
64 g storage
4.3 screen
4.7 screen
5.5 screen
8x camera
12x camera
16x camera
Trade Off
Trade Off

23
EXHIBIT 13: HIGH AND LOW TPU:
TPU STANDS FOR TOTAL PRODUCT UTILITY. THE PRODUCT WITH THE HIGHEST POSSIBLE TPU GIVEN THE
FEATURES AND LEVELS IS THE CONSUMERS’ IDEAL PRODUCT. GENERALLY THIS IS AN UNREALISTIC PRODUCT
BECAUSE THE CONSUMER WANTS MORE THAN THE COMPANY CAN DELIVER WHILE STILL MAKING A PROFIT. THE
PRODUCT WITH THE LOWEST TPU IS THE EXACT OPPOSITE. IT IS THE WORST COMBINATION OF FEATURES AND
LEVELS. THIS IS A PRODUCT THAT THE CONSUMER WOULD NOT PURCHASE UNLESS IT WAS THE ONLY OPTION
AVAILABLE.

24
EXHIBIT 14: COMPARING COMPETITORS
BASED ON WHAT WE KNOW ABOUT CUSTOMER PREFERENCES FOR EACH FEATURE LEVEL WE CAN SIMULATE
THEIR PREFERENCES FOR COMPETING PRODUCTS USING SIMPLE ARITHMETIC. AS INDICATED PRIOR, THE
PRODUCT WITH THE HIGHEST TPU GIVES THE CUSTOMERS THE MOST HAPPINESS. IN THIS EXAMPLE THE IPHONE
6 IS THE MOST IDEAL PRODUCT OUT OF THESE FOUR.
Samsung Galaxy S6
• Camera: 16MP………. 0.230215827
• Screen: 5.1 In………… 0.213472858
• Storage: 32 G….………0.172661871
• Distribu on: Online…0.230215827
• Price: $779….………… 0.221314149
• Carrier: T-Mobile…... 0.230215827
• Ba ery: 8 Hours ……. 0.204636291
• TPU ………………………..1.50273265
iPhone 6
• Camera: 8MP…..…..0.201438849
• Screen: 4.7 Inches.. 0.258992806
• Storage: 64 G………. 0.230215827
• Distribu on: Retail..0.251798561
• Price: $649…………… 0.199213429
• Carrier: At&t………… 0.424460432
• Ba ery: 8 Hours…… 0.204636291
• TPU………………………. 1.770756195
LG G Flex 2
• Camera: 13 MP………..0.18705036
• Screen: 5.5 In………….0.230215827
• Storage: 16 G…………0.122302158
• Distribu on: Online…0.345323741
• Price: $99………………..0.420143885
• Carrier: Verizon……….0.28057554
• Ba ery: 6 Hours………0.143884892
• TPU…………………………1.729496403
HTC One M9
• Camera 20M………… 0.287769784
Screen: 5 In……………0.209287116
• Storage: 64 G…………0.230215827
• Distribu on: Online..0.345323741
• Price:$649……………..0.199213429
• Carrier: T-Mobile……0.230215827
• Ba ery: 5 Hours……..0.153477218
• TPU………………………..1.655502943

25
EXHIBIT 15: CALCULATE MARKET SHARE
TO CALCULATE MARKET SHARE YOU USE THE TPU OF EACH INDIVIDUAL COMPANY DIVIDED BY THE TOTAL TPU
OF THE GROUP. THIS GIVES YOU AN ACCURATE ESTIMATE OF WHAT MARKET SHARE IN THIS INDUSTRY SHOULD
LOOK LIKE. AS YOU CAN SEE THE IPHONE 6 (HIGHEST TPU) ALSO HAS THE HIGHEST PERCENTAGE OF MARKET
SHARE.
24.86%
26.59%22.57%
25.97%
HTC One M9
iPhone 6
Samsung Galaxy S6
LG G Flex 2

26
EXHIBIT 16: MARKET SHARE POST CHANGES
AS YOU CAN SEE BY CHANGING THE CONFIGURATION OF THE SAMSUNG GALAXY S6 WE HAVE INCREASED OUR
MARKET SHARE BY ALMOST 2%. THE RECONFIGURATION WAS A COMBINATION OF SLIGHTLY EXTENDING
BATTERY LIFE, CHANGING THE SERVICE PROVIDER (CARRIER), INCREASING ON BOARD STORAGE CAPACITY, AND
DECREASING PRICE. THIS COMBINATION WILL ALLOW SAMSUNG TO GENERATE A PROFIT WHILE INCREASING
CUSTOMER SATISFACTION WITH THE PRODUCT CONFIGURATION.
23.96%
25.62%25.39%
25.03%
HTC One M9
iPhone 6
Samsung Galaxy S 6
LG G Flex 2

27

28

29

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