MIS784 Conjoint Analysis of the Market

MIS784 Marketing Analytics (Assignment Two)
By(name)
Institutional Affiliation.

Contents
Introduction....................................................................................................................................2
Methodology...................................................................................................................................3
Interpretation.................................................................................................................................5
Recommendation...........................................................................................................................8
Appendix.........................................................................................................................................9
Dummy Variable Generation....................................................................................................9
Parts-Worth Analysis Respondent.........................................................................................11
Source code for the Python Script..........................................................................................12
Table of Figures
Table 1 Dummy Variable Generation..............................................................................................9
Table 2 Regression Analysis...........................................................................................................9
Table 3 Parts-Worth Analysis........................................................................................................11

Introduction
Most of the big name watch making companies are usually traded as publicly as well as
operated like finance companies. According to Terasaki & Nagasawa (2014), growth of a
company in the luxury watch industry can be contradictory. A watch brand could easily destroy
itself if it is expected to grow in today’s saturated market. Growth means establishing more
stores, retailers and inventory.growth in this context is the opposite of exclusivity which is a
necessary factor for any luxury brand to survive and be competitive. Luxury that is not coupled
with exclusivity in the watch industry is not to be perceived as meaningful at all. Luxury watch
companies such as Rolex put a lot of emphasis on the quality of the final product as well as its
components. These brands often omit unusual or unnecessary complications such as perpetual
calendars present in many other less competitive brands such as Oris. Consequently, any brand
that seeks to raise its status focus on the design of their products with emphasis on offering
exclusive features in their watches. The luxury watch market is a very competitive niche market.
The market leading brands of Rolex and Patek-Philippe command a very high level of price in
this market which Oris has not been able to achieve. As a direct competition to two recently
released limited edition watches by Rolex and Patek-Phillipe, Oris planned to launch a new style
of watch to change its narrative in this market. As an initial step towards this course, Oris did a
conjoint study to analyze the market and to identify the gold watch profile which is most likely
to make them succeed in this competitive market. The targeted group in the study were wealthy
people with minimum net worth of $5 million. The study was based on the different watch
attributes to determine the consumer preferences. The purpose of this report, therefore, is to
present a conjoint analysis of the market based on the conjoint study that was conducted.
Methodology
An optimal market research approach was used to determine the value that consumers of
limited edition watches place on the watch attributes. Using a fractional factorial design, the
purchase intentions of the consumers for the different watch profiles were collected. A conjoint
analysis on a segment of the population (20 respondents) was done to determine the likelihood
that Oris watches will get a breakthrough in the next season.
In the conjoint analysis, a model is built where the following are the inputs: Attributes, Levels,
Respondents, Prior Knowledge, Experimental Design and Conjoint Method.

i. Attributes: There are five watch attributes considered namely brand name, price, size of
watch case, type of gold and number of complications.
Importance of the watch attributes in determining consumer preferences
The most important topic in this competitive market is customer’s decision making. Product
valuation depends on its attributes. The conjoint analysis of the different watch attributes is thus
crucial.
The brand name is a significant indicator of the quality of the watch. It is believed that a
renowned company produces more quality products than small companies. In this case, the
Rolex and the Patek-Philippe brands are more trusted by the consumers.
People can be willing to pay more for better product quality. The price of the watch may be used
by a consumer to pre-judge on its quality.
The size of the watch case determines its packaging size. The consumers may link packaging
size to watch prices and a smaller size could change the price perception of the customers. The
size also gives an idea about the weight of the watch and big sizes could be a turn-off for some
customers.
The type of gold used on the watch may give the customers a perception on the price and quality
of the product. Moreover, color is important for aesthetics purposes as some costumers would
prefer one color to another.
The number of complications on the watch could be additional features of the watch. These are
welcomed by some customers while others will just prefer a simple design with zero
complications.
ii. Levels: The levels/variables of the different attributes are as shown in the table below
Table 1: Conjoint Study Design
Attribute Level 1 Level 2 Level 3
Brand Rolex Patek-Philippe Oris
Size of watch case 39mm 42mm 45mm
Number of complications 0 3 5