Conjoint Analysis: A Case Study of Sony

This research paper employs conjoint analysis to investigate the preferences of plasma televisions. The study evaluates three attributes that are believed to influence the consumers’ purchasing power; they include brand either Samsung or Sony, screen size, refresh rate, display and the price of the television.

Running head: CONJOINT ANALYSIS: A CASE STUDY OF SONY 1
Conjoint Analysis: A Case Study of Sony
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CONJOINT ANALYSIS: A CASE STUDY OF SONY 2
Conjoint Analysis: A Case Study of Sony
Introduction
Conjoint analysis is a statistical technique employed to investigate the choice preferences
of goods by consumers. The method employs quantitative measures and is used to measure the
market value of attributes of products under the study and make valid predictions of the sales
trends of the product (Shepherd, and Zacharakis 2018). For this research paper, conjoint analysis
has been employed to investigate the preferences of plasma televisions. The journal seeks to
explore the chances for Sony Technology Company introducing their brand of televisions to
compete with the likes of LG and Samsung who are already in the market. The study evaluates
three attributes that are believed to influence the consumers’ purchasing power; they include
brand either Samsung or Sony, screen size, refresh rate, display and the price of the television.
The brand has two measures either Samsung or Sony, screen size has two measures 75 inch and
65 inches, refresh rate is given as 120, resolution is given at 4000, and the price is represented as
either 4000 and 6000 dollars (Ben-Akiva, 2019). The primary objective of the research paper is
to evaluate the best products for Sony to invest in the market with a minimum risk contingency.
The journal seeks to present products that will be profitable and able to compete with the already
existing competitors of Samsung and LG in the Australian television market.
Regression analysis
In the determination of the part worth or the contribution of each attribute towards the
decision of buying a television regression analysis is used as shown in table 1.1 below. The
dependent variable for the regression model is the preference of television choice, which is
measured as a Likert of values 1 – 7 where one represents less preferable, and seven most

CONJOINT ANALYSIS: A CASE STUDY OF SONY 3
preferred option of television. The multiple regression model has eight independent variables
that include 65 inches, 75 inches, Samsung, Sony, 120 refresh rate, 4000 pixels resolution, 4000
dollars for price and 6000 dollars.
Table 1.1: Linear regression parameters
Parameter Coefficients Standard Error t Stat P-value
Intercept 2.780329552 0.535314486 5.193824612 0.000568731
65 -0.741788223 0.422492652 -1.75574231 0.11301758
75 -0.024200432 0.404058703 -0.05989336 0.953549429
Samsung -0.449078876 0.397600236 -1.12947336 0.28790182
SONY 0.183454889 0.422492652 0.434220308 0.674352262
120 0.970186386 0.388060457 2.500090817 0.033856782
4000 Pixels -0.146693679 0.340660654 -0.43061527 0.676876661
4000 2.315388979 0.415668317 5.570280154 0.000347256
6000 1.059862237 0.403753499 2.625023037 0.02758282
Table 1.1 shows the regression parameters for the television attributes given in the
parameter column, as shown in table. The part worth of each attribute is given by the
coefficients’ values given in the second column, while the last column p-value indicates the
contribution of the attribute in influencing the buying choice of television in the market. The
intercept presented as row two in the table shows the part worth of the base product and the
contribution to the market, which in this case is LG brand of televisions (Arenoe, 2015). The
attributes with a p-value > 0.05 is said to be insignificant or the attribute has a minimal effect in
influencing the outcome of the dependent variable preference of television or choice, however
those attributes with a p-value < 0.05 is said to be significant and has a great influence in
determining the outcome of the dependent variable preference of television. From the table the
base reference is produced as the intercept coefficient that was obtained as 2.78; it implies that
keeping all utilities constant the market preference of televisions is 2.78. The standard error

CONJOINT ANALYSIS: A CASE STUDY OF SONY 4
column in the table shows the possible variation of the coefficients estimates, and the best
variation is the one closest to zero meaning there is no error variation for the estimates (Vukic,
2015).
Part worth analysis
In the analysis, utilities such as refresh rate of 120 and the price of televisions of 4000
dollars and 6000 dollars have significance values of 0.033, 0.000 and 0.002 respectively, which
are less than p-value 0.05 hence, is said to have a significant influence on the choice preference
of televisions in the market (Kelley & Bruwer, 2015). The coefficient values for the variables
that represent the parts worth of the utilities are 0.9702 for 120-refresh rate, 1.0599 for
television price of 6000 dollars and 2.3154 for television price of 4000 dollars. The higher the
part-worth value, the more the utilities affects the customer preference of televisions in the
market, i.e. the price of 4000 dollars is very attractive to customers followed by the price of 6000
dollars and finally the refresh rate of 120 GHz (Hollin, & Bridges, 2015). The other utilities 65-
inch screen size, 75-inch screen size for Samsung and Sony have insignificant p-values hence,
their influence towards the choice preference of televisions is minimal. However minimal the
coefficient value if it is larger than zero it shows that the utility does influence the preference
outcome thus all the utilities have an effect on the consumer buying behavior for televisions in
Australia.

CONJOINT ANALYSIS: A CASE STUDY OF SONY 5
Table 1.2: Part worth for television preference utilities
Part-worths
Screen size
65 -0.74178822
75 -0.02420043
Brand
Samsung -0.44907888
SONY 0.183454889
Refresh rate 120 0.970186386
Resolution 4000 pixels -0.14669368
Price
$4,000 2.315388979
$6,000 1.059862237
Table 1.2 shows the part-worth levels for each utility for television preferences. From the
table the highest level for the attributes is 4000 dollars price tag with a preference level of 2.3154
followed by the price tag of 6000 dollars with a preference level of 1.0599. The lowest
preference level is the screen size of 75 inches with a preference level of -0.0242 closely
followed by the attribute 4000 pixels resolution that registered a preference level of -0.1467.
According to table, 1.2 above the 120-refresh rate is very popular among the consumers, and the
utility managed to record a preference level of 0.9702 while the preference attribute level of 65
inches television is recorded as -0.7418 and that of brand Sony as 0.1835.
Importance rate
Table 1.3: Importance of summary output
utility Level Importance %Attribute
Screen size
65 -0.7417882 0.741788223 12.59262996
75 -0.0242004 0.024200432 0.410827617
Brand
Samsung -0.4490789 0.449078876 7.623583037
SONY 0.18345489 0.183454889 3.114338384
Refresh rate 120 0.97018639 0.970186386 16.46992736
Resolution 4000 pixels -0.1466937 0.146693679 2.49027844
Price
$4,000 2.31538898 2.315388979 39.30614659
$6,000 1.05986224 1.059862237 17.99226861

CONJOINT ANALYSIS: A CASE STUDY OF SONY 6
The importance of an attribute is calculated by finding the range between the preference
level of the attribute and the base level. In this research paper the base preference level is zero
hence the importance level of the attributes is given by the absolute values of the part-worth
preference levels as shown in table 1.3 above. The highest importance value the more important
the attribute is determining the consumers want. From the analysis, the most important utility is
the price tag of 4000 dollars with an importance rate of 2.3154 followed by the 6000 dollars
price tag with an importance level of 1.0599 (Mizik, & Hanssens, 2018). The least important
utility in the study is presented as 75 inches television with an importance value of 0.0242
followed by the resolution attribute of 4000 pixels with an importance level of 0.1467. The table
also indicates that the refresh rate of 120 and the 65 inches attribute to have importance levels of
0.97 and 0.7148 respectively while brands Samsung and Sony registered importance levels of
0.4491 and 0.1835 respectively. The percentage attribute is also provided in table 1.3 as
indicated above, from the analysis the percentage attributes is distributed in descending order as;
4000 dollars price tag = 39.31%, 6000 dollars price tag = 17.99%, refresh rate of 120 = 16.47%,
65 inches = 12.59%, Samsung brand = 7.62%, Sony brand = 3.11%, 4000 pixels resolution =
2.49% and 75 inches = 0.41%. The higher the attribute percentage, the more the utility
contributes to the preference choice of televisions in the market (Aribarg, 2017).
New products that Sony would introduce to the market and their purchase probabilities
From the study, Sony can only produce televisions units with a resolution of 4000 pixels
and a refresh rate of 120 GH. The analysis shows eleven possible products that Sony can provide
and try to compete with the existing competition of LG and Samsung for market share in the
television industry.

CONJOINT ANALYSIS: A CASE STUDY OF SONY 7
Table 1.4: New Sony products
New products Description Purchase probabilities
1 SONY 65 in 120 HZ 4000 Pixels $9000 3.045488925
2 SONY 75 in 120 HZ 4000 Pixels $9000 3.763076715
3 SONY 65 in 120 HZ 4000 Pixels $6000 3.921896272
4 SONY 75 in 120 HZ 4000 Pixels $4000 5.895010805
5 SONY 85 in 120 HZ 4000 Pixels $6000 4.663684495
6 SONY 85 in 120 HZ 4000 Pixels $4000 5.919211237
7 SONY 65 in 120 HZ 4000 Pixels $4000 5.177423015
8 SONY 75 in 120 HZ 4000 Pixels $6000 4.639484063
9 SONY 85 in 120 HZ 4000 Pixels $9000 3.603822258
10 SONY 65 in 120 HZ 4000 Pixels $9000 2.862034036
11 SONY 75 in 120 HZ 4000 Pixels $9000 3.579621826
Table 1.4 shows the possible new products that Sony may introduce to the market. The
list contains eleven television options with different attributes. The given products given have the
following attributes screen size in inches (65, 75 and 85), refresh rate of 120HZ, a resolution of
4000 pixels and a price tag in dollars of 4000, 6000 and 9000. Each description of the proposed
products is accompanied by a preference rate, which is a Likert scale of range 1-7, where one
represents the least preferable product in the market and seven as the most preferable product in
the market. From the analysis the most preferable products in the list are SONY 85 in 120HZ
4000 Pixels $4000 with a preference score of 5.92, followed by SONY 75 in 120 HZ 4000
Pixels $4000 with a preference score of 5.9 and SONY 65 in 120 HZ 4000 Pixels $4000 comes
in third with a preference rate of 5.2 (Popovic, 2018). Table 1.4 also has information on the least
preferred products in the market, and the very least is SONY 65 in 120HZ 4000 Pixels $9000
with a preference rate of 2.86 closely followed by SONY 65 in 120HZ 4000 Pixels $9000 with
a preference score of 3.05. Products such as SONY 75 in 120HZ 4000 Pixels $6000, SONY 85
in 120 HZ 4000 Pixels $6000, SONY 65 in 120 HZ 4000 Pixels $6000 and SONY 75 in

CONJOINT ANALYSIS: A CASE STUDY OF SONY 8
120HZ 4000 Pixels $9000 reported high preference scores of 4.66, 4.64, 3.92 and 3.76
respectively.
Purchase probabilities
In marketing theory, consumers prefer the best of product attributes with the least cost
possible hence price plays an integral role in the preference choice of a product in the market
(Meyerding & Merz, 2018). Why the product is preferable in the market is because this is the
biggest television 85 inches with a good refresh rate and resolution rate at the lowest possible
price tag of 4000 dollars. It indicates that the consumers are attracted to the low price and the
expensive utilities associated with the product (Gursoy & Zhang, 2017).
The least preferable product in the market is SONY 65inches, a refresh rate of 120HZ a
resolution rate of 4000 Pixels and a price tag of 9000 dollars, this product has the same
resolution rate and refresh rate as the most preferred product. However, the screen size has
decreased to 65 inches, and the price has increased to 9000 dollars which is a bad deal compared
to the price of the most preferred product. Both products would not do well in the market since
an 85 inches Sony television with a 4000 dollars price tag will register losses to the company
since the product is too expensive to produce but cost cheap in the market (Wackershauser,
2018). A 65 inches Sony with a price tag of 9000 dollars will not be a favorite in the market
since the utilities are low and the price is high hence only limited editions of the product will be
sold. The best product is a product that balances the utility cost and the price of the product in the
market. According to the analysis the company should produce the following products for the
market; SONY 75 inches 120HZ 4000 Pixels $6000, SONY 75 in 120HZ 4000 Pixels $9000,
SONY 65 in 120HZ 4000 Pixels $6000 and SONY 85 in 120HZ 4000 Pixels $9000. All the

CONJOINT ANALYSIS: A CASE STUDY OF SONY 9
given products registered a preference rate of above 3.5, which is more than 50% of the
preference rate thus the products will have a good chance of competing with the products in the
market.
Profitable products for Sony to explore
Table 1.5: Cost-benefit analysis for new products
Product profile
Market
share
Base
cost
Additiona
l cost
Total
variable cost Sales Price Profit
SONY 75 inches
120HZ 4000 Pixels
$6000 4.64% $800 $600 $1,400 4640 $6,000 $19,344,000
SONY 75 in 120HZ
4000 Pixels $9000 3.76% $800 $600 $1,400 3760 $9,000 $26,576,000
SONY 65 in 120HZ
4000 Pixels $6000 3.92% $800 $0 $800 3920 $6,000 $18,384,000
SONY 85 in 120HZ
4000 Pixels $9000 3.60% $800 $1,000 $1,800 3600 $9,000 $23,920,000
Market share analysis
Table 1.5 shows the summary output for the cost and profit analysis of producing four
new products that Sony should explore in bringing to the market. The products include 75 inches
Sony television with a refresh rate of 120HZ, a resolution of 4000 pixels and a price tag of 6000
dollars as product 1, 75 inches Sony television, 120HZ refresh rate 4000 pixels resolution and a
price tag of 9000 dollars as product 2. Product 3 is a 65 inches Sony television with a refresh rate
of 120HZ, resolution of 4000 pixels and a price tag of 6000 dollars, while product 4 is an 85
inches Sony television with a 120HZ refresh rate, a resolution of 4000 pixels and a price tag of
9000 dollars (Annunziata & Vecchio, 2016). From the table product, one has the highest market
share of 4.64%, followed by product 3 with a market share of 3.92%. Products 2 and 4 have
market shares of 3.76% and 3.60% respectively. The base cost of any product in the market is

CONJOINT ANALYSIS: A CASE STUDY OF SONY
10
given as 800 dollars as shown in the table above. Additional costs only apply to televisions with
screen sizes of 75 inches and 85 inches, where the additional cost for 75 inches is 600 dollars
while that of 85 inches is 1000 dollars.
Variable cost
The total variable cost for producing product one is 1400 dollars the same as producing
product two as indicated in the table. The variable cost of producing product three is the lowest
since there is no additional cost and hence, the cost is given as the base cost of 800 dollars. The
most expensive product to produce is product four, which has a variable cost of 1800 dollars
(Kim, 2018). According to the table product, one will have the most sales of 4640 units, followed
by product three reaching a sale of 3920 units. Product 4 will register the least amount of sales
with a sale unit of 3600 followed by product two, which will manage a sales volume of 3760
units.
Profit margins of new products in the market
The profit margins are given as product 1 = $19,344,000, product 2 = $26,576,000,
product 3 = 18,384,000 and product 4 = 23,920,000 as indicated in the Table 1.5 above. From
these results, it is evident that the most profitable product in the market is product 2, which is a
75-inch Sony television with a refresh rate of 120HZ, a resolution of 4000 pixels and a price tag
of 9000 dollars (Donadini & Porretta, 2017). The second most profitable item is product 4, which
is an 85-inch Sony television with a refresh rate of 120HZ, a resolution of 4000 pixels and a
price tag of 9000 dollars. The two variables are the only ones to hit a 20 million profit margin
with a Sony market size of 5% in the industry. In the table the third most successful item is
product one which is a 75 inch Sony television with a refresh rate of 120HZ, a resolution rate of

CONJOINT ANALYSIS: A CASE STUDY OF SONY
11
4000 pixels and a price tag of 6000 dollars per unit. According to the analysis, the least
successful item will be product 3, which is a 65-inch Sony television with a refresh rate of
120HZ, a resolution rate of 4000 pixels and a price tag of 6000 dollars per unit. However, the
case all the four products discussed in this analysis are profitable and Sony should consider
producing the products to compete with the brand models such as Samsung and LG in Australia
(Arboretti, & Bordignon, 2016).
Conclusions
According to the analysis, there is evident to indicate that Sony stands a chance of
making a profit by introducing television products in the Australian market. The company should
focus mainly on the products with the highest market share since they have a bigger buying rate,
however, production of the most profitable products should also be a primary to ensure that the
company optimizes their profits in the industry. From the analysis, it is evident that the market
share does not normally predict a high profit, and that the variable cost does not necessarily
predict a low profit for the products produced. Thus leading to the conclusion that Sony should
explore all the four products however managing a balance between the most profitable and the
market share of the products in the market. The analysis provided supports the theory since the
products with the highest preference choice have the lowest prices and have the best attributes
i.e. the most preferable product is SONY 85 inches with a refresh rate of 120HZ, a resolution of
4000 Pixels and a price tag of 4000 dollars.

CONJOINT ANALYSIS: A CASE STUDY OF SONY
12
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