EE&MC applies conjoint analyses to examine the consumers’ willingness to pay. This method is particularly suitable for products that are characterised by different product features.
A conjoint analysis enables the determination of the valuation of the benefits that consumers get from consuming these products. This method assumes that the selection is defined by utility evaluations. Giving the respondents the choice to choose between several products will reveal their valuation of benefits. The word “conjoint“ means that the relative utilities of specific product features are not quantifiable if the features are considered one after another. Only a joint examination enables a quantification.
Therefore, the partial utility of each product feature will be calculated, whereby the sum determines the total utility. As a result, the utility function and the cost function can be defined and used to calculate the price-demand function. All these calculations form the basis for the market simulation models, which in turn enable price forecasts.