Product by Design - Lands' End Web site

American Demographics, Feb, 2001 by David J. Lipke

An increasingly popular research technique helps marketers and consumers get what they really want.

This past November, the Lands' End Web site launched "My Personal Shopper," a recommendation engine for customers who want help sorting through the retailer's vast selection of sweaters, skirts, and button-downs. Big whoop, you say - Amazon's been doing this for years. But unlike companies that use past purchases to proffer suggestions to cyber-browsers, Lands' End is the first apparel retailer to use a technique called conjoint analysis. In a brief survey, six pairs of outfits are shown to the shopper, who chooses a preferred outfit among each pair. Through analysis of these six simple choices, and the answers to a few other questions, the site sorts through 80,000 apparel options and presents the most suitable ones to the busy shopper.

While the use of conjoint analysis by Lands' End is unique, the methodology itself is not. It's a research technique that has been around for three decades, but which is increasing in popularity as software developments and the Internet make it easier to use, as well as more powerful and flexible. Understanding how conjoint analysis works, and the innovative ways it's now being used, provides a good opportunity for any company to increase its chances of giving consumers more of what they want, and less of what they don't. "Use of this method will increase as more marketers realize what it can do, and how well it can work," says John Seal, senior analytical consultant at Burke, Inc., a Cincinnati-based research firm.

So what is conjoint analysis? The rationale underlying the technique is that consumers weigh all the many elements of a product or service - such as price, ingredients, packaging, technical specifications, and on and on - when choosing, say, a sweater, airline ticket, or stereo system. While this may seem obvious to anyone who's faced a wall of DVD players at Circuit City, figuring out how to leverage this concept in the marketing arena can be difficult. Conjoint analysis does this by breaking products down into their many elements, uncovering which ones drive consumer decisions and which combination will be most successful. But rather than directly asking survey respondents to state the importance of a certain component a la traditional surveys, participants judge hypothetical product profiles, consisting of a range of defining characteristics called "elements." Their responses are run through an analytical process that indirectly identifies the importance and appeal of each element, based upon their pattern of preferences for the element groups.

If this process sounds more complicated than a traditional survey, it is. And it tends to be more expensive as well. But, as the saying goes, you get what you pay for. While traditional surveys can gauge interest in product features, the results can be misleading. This is because it can be difficult for respondents to directly relate how valuable a particular product feature will be to them. "If you ask respondents how much they are willing to pay for a certain feature, they often can't or won't answer truthfully," says Tom Pilon, a Carrollton, Texas-based consultant who specializes in conjoint research projects. "They'll tend to say they're interested in all the new features." They wouldn't be lying, but they might not actually pay for those features when the product comes to the market. Similarly, focus groups are a good way to draw out consumer opinion on new products, but it's difficult to accurately quantify how a product will perform in the marketplace from this data.

"Conjoint mimics the way that consumers actually think," says Joel Greene, director of database marketing at Akron, Ohio-based Sterling Jewelers. Greene first used conjoint research last spring, and is impressed with the results. Fed up with consumers tossing his mailings into the trash, Greene hired White Plains, New York-based market research firm Moscowitz Jacobs Inc. (MJI) to figure out a way to make them more appealing. Using a proprietary research tool called IdeaMap, MJI worked with Greene to systematically break down the brand image and communication efforts of Shaw's (a division of Sterling Jewelers) into bite-size elements. These factors were culled through focus groups and brainstorming sessions that examined previous marketing efforts and possible new approaches. Well over a hundred elements were part of the tested pool, which included different ways to convey messages about Shaw's stores, merchandise, brand differentiation, and emotional appeals. "We wanted to cast a wide net, because we didn't know what would work," says Greene.

MJI recruited a group of more than a hundred survey respondents to its testing facilities in Chicago and White Plains. Seated at computers, they were systematically exposed to the different elements, grouped as words, phrases, and pictures. For each random grouping of elements, the respondent would rate the appeal of the group as a whole. From an analysis of the pattern of ratings, MJI was able to give a utility score to each element. Using these scores, Shaw's could then create marketing messages from this universe of elements appealing to the widest group of customers, or to specific segments. The words, phrases, and pictures (i.e. elements) that scored highest for each segment were then used to create new mailings. And the glittering result? The creative geared toward each segment resulted in significantly higher rates of response, as well as increased dollar sales per response.