Team 3

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California State University, Long Beach *

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475

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Marketing

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Feb 20, 2024

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docx

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Team 3: MKTG 475 Sec 01 Case Study - FORTE HOTEL Question 1 - Summary of the advantages and limitations of describing products as bundles of attribute options. Advantages: The company is given the flexibility and wide range of attribute levels to add on to increase customer preferences. Because it gives customers flexibility and customization in choosing the bundles of different attribute levels, more chances that a company can target various segments based on those unique bundles of the product. One advantage when a company can target various segments is the ability to charge different prices to different and broader customer bases. When a product is described as a bundle of attribute options, more chances that the product can be altered and innovation and development will be available, especially when consumers often change their preferences if any new trend is introduced in the future. That information can be useful to create different bundles with new attribute levels that are higher in utility and more important to the attributes provided. In addition to the ability to facilitate products, when introduced as bundles, it is more likely that companies can review each attribute level and identify the most appealing one to their product to the mass market. Limitations: Along with the flexibility and customization advantages of products described as bundles of attribute options, the complexity when there are many attribute levels can be added on is one limitation that we think of. Because the attribute levels should be mutually exclusive with each other, the complexity of using the most accurate levels and analyzing them are unavoidable. With many choices in attribute levels, each respondent will have to go through each profile of the product as each level represents one partworth. The company also may not guarantee that they can meet all the attribute options in the bundle if, in any case, the preferable bundles need a higher budget, but the company has to include those attribute options because they need them for broader customer evaluation.

Question 2,3 - Summary of the advantages and limitations of conjoint analysis for obtaining preference data from customers. These are our preference partworths based on our ratings of each profile. On average, the most important partworths to us are tape library, fruit and cheese, and speaker phone. The most important attributes we consider are business amenities, conveniences, and types of room choosing a hotel if we are on a business trip. It is not important to us whether we have any type of leisure facilities such as a pool or exercise room when we are on a business trip. We would prefer a small suite with speaker phones for any company meeting during our stay.

Advantages: The company may use the information of when consumers preferences switch from the previous data to the new one due to trends in the market to pivot its product development plans. It is important for the company to understand the choices consumers make when balancing various attributes and their preferences for each level of these attributes. In addition, using conjoint analysis, the company can reduce the workload for participants by decreasing the quantity of choices they need to assess and providing a summarized overview of various options. One advantage that I think is important is that the analysis provided me with some new attribute options that I might have not thought of when looking for a hotel room for a business trip. For example, shoe shine service is absolutely new and interesting. It gives the sense of professionalism and something that is more common in European countries than in America, which definitely brings new insights to customer preference rating. Another advantage of conjoint analysis is that it helps break down complex preferences and decisions into smaller options/levels and analyzes those components methodically. It is important to note that preference share indicates the degree of preference for a specific level compared to others. A high share indicates a strong preference for that particular level. Because of that, conjoint analysis will help gain insights of customers through obtaining and analyzing their preferences data. Limitations: Using conjoint analysis to obtain preference data from customers can fail to accurately predict those preferences are available and applicable in real life when the product is launched. It is the assumption that the preferences provided by the hotel will fit the customers choices and that those preferences are the main driver of the company decision-making when applying them to the market for the target customers. For example, if I was on a business trip, I would prefer my

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room to provide me the essentials as listed on the five attributes with additional service such as the shuttle service and the location with attractions nearby. Even though I am on a business trip, it does not mean I cannot enjoy my time walking around the neighborhood in a foreign country. In addition, customers can have strong preferences toward certain attributes and, as the product is described as a bundle, customers tend to provide general preferences instead of the precise, specific ones. Question 4,5 - Identify the optimal product concept from among those Forte is considering I would recommend going with the optimal product 2. The room has shoes shine service, an exercise room that opens 24/7, and a restaurant which is pretty similar to what “profession 2” has to offer. And there are even restaurants for the convenience of food ordering. With the optimal product 2, they also have a reasonable fixed cost to break even. The market share is relatively high. This room is fit for people who are looking for a safe option and has the essential convenience for customers to enjoy their stay. Question 6 - Would you recommend product concepts other than the four that Forte is considering for the State College market?

Other than the four product concepts that Forte is considering, we would recommend a small suite with a speaker phone, pool, fruit and cheese, and restaurant. This is the optimal product based on partworth data from the simulation we ran. This combination of offerings will achieve best results, with a potential leading market share of 31.2%.

Question 7 - Summary of the major advantages and limitations of using the conjoint analysis for new product design. In general, conjoint analysis can be very useful for new product design. Conjoint analysis allows us to determine the importance of different attributes that are relevant to the target market. This provides a guide to make better informed decisions on which features to prioritize as these will be the ones that consumers actually value. Knowing what attributes consumers value also

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helps make realistic trade offs that will better represent the actions of consumers. Conjoint analysis allows us to make a reasoned high-stake decision, as more information on desirable attributes and attribute levels is available. The information provided also means desirable new alternatives can be synthesized. Conjoint analysis also has the advantage of being able to be applied to a wide range of products and services for multiple different industries. Different market segments can also be identified depending on consumer preferences so that firms can adapt their product or service to specific markets. Although conjoint analysis is a very powerful tool, it is not without its limitations. For starters, collecting the data to conduct a conjoint analysis can be a very delicate process. The survey design must be carefully crafted to accurately gather information on the consumer. If the data gathered isn't accurate to the market, then no conclusion can be confidently drawn from the analysis. Garbage in, garbage out. The quality of the results is extremely dependent on the quality of the data and how accurately consumers give their feedback. The attributes and attribute levels included must also be relevant or else the results may not accurately represent the preferences of real consumers. The final limitation of conjoint analysis that we wanted to mention is how resource intensive it is. Designing the survey, collecting the data, the time, and money that a conjoint analysis demands add up quickly. Although this isn’t of much concern to larger firms, small businesses are not as fortunate since they have far less resources at their disposal. Business must consider all of these advantages and limitations when considering using conjoint analysis for new product design. Question 8 - Statement agreement? Though I understand the manager’s reasoning against conjoint studies, I do disagree with this statement. I believe that the pros of conjoint studies outweigh the cons. Conjoint studies provide us with valuable data and perception into consumer preferences and tells us what key features customer value the most. This information helps us in the decision-making process. Conjoint studies also reduce cost and save a lot of time rather than waiting to get feedback after a product/service has been launched. The manager does make a solid argument that it is hard to accurately predict what the customer actually prefers without them experiencing it. They can say one thing, but then easily change their choices. Another thing the manager pointed out was how relying too much on customer preference can lead to mediocrity. If we just listen to what the consumer wants, then there is not much room for innovation and creativeness. With that being said, though the manager makes some very valid points, I disagree with their statement because I feel like conjoint studies are very effective if used correctly and they provide valuable data and information that can help the decision-making process easier and less stressful. TEAM CONTRIBUTIONS NAME LEADER ROLE CONTRIBUTIONS

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