I have want to prepare a survey, the data from which will be used for conjoint analysis. The next phase would require doing a price elasticity study.

The study is for a cosmetic product.The company would like to compare it to 3 or 4 other competitive products, asking questions about 5 attributes (including price).

I am stuck with the following questions

- How do I go about preparing the choice sets?
- Should I go for a full profile survey?
- How many attributes should be shown to the respondent at a time (if a full profile is not an option)?
- How many respondents should I be targeting?
- How is price elasticity related to conjoint analysis?

What is the 'Statistics' behind preparing a questionnaire?

Can anyone help me out with the steps to be followed? Also if anyone could provide me with an example or some reference material

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#### Best Answer

Below is a point by point breakdown of the use and interpretation of conjoint analysis. I would suggest that you read carefully through the details to ensure the questions you are asking are relevant for your use case and that they are not

Depending on the size of your sample population, you may want to limit the number of your attributes that respondents can reply to in order to avoid potential issues that can occur based on the size of your attribute matrix.

As for the price elasticity of demand, you will need to take into consideration that this is only representative of the sample you are dealing with and not necessarily an actual market price sensitivity analysis (outlined by IBM here: http://www.ibm.com/developerworks/library/ba-price-sensitivity/).

A fair warning on the implications of assuming you are measuring price elasticity of demand directly can be found in an excerpt of the link below:

"In summary, the common practice of converting differences between attribute levels to a monetary scale is potentially misleading. The value of product enhancements can be better assessed through competitive market simulations."

http://www.sawtoothsoftware.com/download/techpap/interpca.pdf

These resources should get you off on the right footing.

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