Business Scenario: You currently offer a premium product in the market place. A competitor recently launched a “knock-off” version of your premium product at a lower price point and it’s eating away at your revenue. To counteract this you want to release a lower cost version of your premium product to compete with your competitor. However, you have one big concern, “Will releasing a lower-cost version of my premium product eat away at the revenue of the premium product – and ultimately reduce overall revenue?”
Good news - this is a common business problem. Even better news – there is a research approach that fits this business problem to a tee. The approach is called Conjoint Analysis. Instead of talking in general terms about how the approach works, we think it would be more valuable to show real-life applications of how this approach is used to address important business problems.
Let’s look at Conjoint Analysis directly through the lens of the business problem – “How do I avoid cannibalization in new product development?”