Using conjoint analysis to help design product platforms

This article illustrates how one can combine different conjoint analysis studies, each containing a core of common attributes to help design product platforms that serve as the foundation for multiple derivative products. The illustration is based on actual, but disguised, data from a small company that makes electronic test equipment. This article demonstrates that decisions that consider products individually are likely to be suboptimal and can be significantly different than those based on product platforms. Suboptimality can occur either when preferences for product features differ across markets or when a technology is more important to the overall company than it is to an individual product. Additionally, we show the importance of considering both fixed and variable costs when performing this type of analysis as sales, contribution, and profit-maximizing products are quite different. Finally, sensitivity analyses show that these results are robust with respect to assumptions about price sensitivity, fixed costs, and timing of entry. (C) 1999 Elsevier Science Inc.