Application of Conjoint Analysis in Pricing Research: Comparison of Approaches to Inclusion of the Price Attribute

The master thesis is devoted to study of the price attribute in a conjoint analysis. The impact of price on consumer behavior expressed in sophisticated non-linear patterns. Besides, this value is directly related to the profits, and therefore, has one of the key importance in economic activity. In a conjoint analysis there are two approaches of including the price attribute, which are compared: the traditional (single price) approach and the conventional prices approach. The main issue is to assess the validity and quality of the research findings on the impact of the price attribute on the product selection when using each of the examined approach of conjoint analysis. In the literature the specifics of the inclusion of the price attribute in a conjoint analysis is not fully described. Thereby, it is practically impossible to make a theoretically grounded choice of the approach to include the price attribute in the general model. In this paper, this problem is solved by means of a theoretical analysis of the evolution of the pricing research methods and based on the analysis of empirical data collected in the quantitative survey using a special tool for the choice-based conjoint analysis (online survey of the customers of a retail network, n = 600). For the two experimental groups there were estimated levels utility and attributes importance. A comparative analysis of relevant indicators (usefulness, importance) was conducted using the traditional (single price) approach and the conventional prices approach. The key practical finding is a proved limitation of using only conventional prices or only single prices in a conjoint analysis. The paper makes a justified recommendation of simultaneous usage of this approaches to be able to carry out a simulation of various market scenarios and understanding the importance of separate attributes.