Segmenting Markets with Conjoint Analysis

Abstract

Conjoint analysis is a useful measurement method for implementing market segmentation and product positioning. The authors describe how recently developed optimal product design models provide a way to test the effectiveness of a selected class of market targeting strategies. They first propose a conceptual framework for describing segmentation in the context of conjoint analysis input data. Then they apply that framework to an illustrative case study entailing physicians’ preferences for a newly developed prescription drug. They conclude with a discussion of the limitations of the proposed method.