Example: Competitive potential of snacks

A difference between standard acceptance and potential of a brand can be illustrated using the data obtained in a conjoint study with the questionnaire equivalent to the demo " A Class-based Design of a Brand-Price CBC". There were 3 package size variants of three flavors, i.e. 9 products of the First brand. The competition was represented by two other brands, each of 3 flavors of the same package size, i.e. altogether 6 products. A class-based design was used to counterbalance these settings.

Distribution of utilities of the portfolio of all 9 products of the First brand is shown in the pictures below. The left one (or upper one on a narrow screen) shows distribution of utilities based on standard centered part-worths with no regard to the competition. As the portfolio was broad, nearly every individual was able to find a selectable product in it, and the mean brand utility (4.64 logit) was high. The right picture shows distribution of utilities of the First brand competitive potential which reflects the directly competing products for each individual. The utility was computed as the difference of the expected utility value for all First brand tested products and the expected utility of the competing brand portfolios. The mean is substantially lower due to the reflection of competition. The increase in dispersion indicates inhomogeneity of preferences in the sample. Clearly, understanding of utility values in logit units is not simple or straightforward and requires some experience.

Standard utilities of the First brand based on centered part-worths

While this example is a special case, some features are typical. Product or product portfolio acceptances computed from standard centered part-worth are usually (but not as a rule) unreasonably high and, therefore, not quite suitable for an interpretation. A more informative view is provided by potential, i.e. acceptances that use the relevant competition as a reference.This is demonstrated in the pictures below.

Standard acceptances for the First brandCompetitive potential for the First brand

The left picture shows distribution of acceptances for the current First brand portfolio composed from 4 piece packages only. It would suggest the portfolio is enough attractive for most people to select from. This picture gets substantially changed in the competitive arrangement. Only 9% (16 of 186, acceptance > 0.9) of the sample strongly prefers a product from the current portfolio in presence of the competition. However, based on the standard acceptance, only about 20% of the sample (38 of 186, acceptance < 0.1) are not willing to accept the First brand portfolio. On the other hand, there are about 32% (60 of 186, acceptance > 0.9) attracted (but not necessarily loyal) consumers in the sample. The rest (about 47%) are more or less susceptible to switch between the brands. The information which products may perform better in presence of competition, i.e. which are portfolio acceptance and diversity enhancers rather than substitutes cannibalizing on their sibling products, can be obtained from the portfolio optimization method.

As aside