Sunbeam's conjoint analysis study: strengths and weaknesses

Conjoint Analysis

Redesigning Product Lines with Conjoint Analysis:

How Sunbeam Does It

What are the strengths & weakness of the studies ?

The Sunbeam Appliance Company (SAC) division is facing the challenge of differentiating their core product lines, as they are rapidly maturing and losing market share and profits. The decision to pursue conjoint analysis is made to accomplish the following goals. First, Sunbeam wants to know what models need to be in the product line, what their physical appearance needs to be what their performance characteristics also need to be (Page, Rosenbaum, 1987). What follows is an analysis of the strengths and weaknesses of these studies and what Sunbeam could have done differently to minimize the study's weaknesses, which are many.

Weaknesses

There are many weaknesses with the implementation of the conjoint analysis done by Sunbeam. Ironically the methodology includes 27 orthogonal arrays and 12 attributes yet the conclusions yield little in the way of disruptive innovation to the product line. This is the first of several flaws in the methodology. With so much complexity of arrays and attributes it is no wonder they eventually end up only making a small increase (2%) in market share. They are testing what they already have and lost a major opportunity to discover what the next technology or appliance is that would eventually render food processors obsolete.

Second, the methodology itself is seriously flawed. From the fragmented approach of defining Consumer Attribute and Benefit Survey and Conjoint Analysis data to the use of product line simulations, the methodology from purely a content-based standpoint doesn't' have the right breadth of features to deliver a valuable result. This is a fatal error many industrial marketers make with their methodologies. The concentration on features and functions, and attitudinal measurements of the here-and-now lead to a myopic view of product lines and destine them for failure (Auty, 1995).

Third, the sampling frame is wrong and also a major factor in the failure of Sunbeam to gain market share. Interviewing 500 women in malls with no respondent screening and no stratification to segmentation criteria, no -- re-screening qualification apart from being head-of-household is only capturing a part of what they need to know. This aspect of the methodology also assures Sunbeam they will only capture the most price-driven, unprofitable potential customers they can find. It is no wonder the results show a strong bias to higher-end brands as women in this demographic segment are more aspirational buyers of every appliance, from the food processor to the refrigerator. Sunbeam emerges from the study clueless that the brands and labels in a kitchen are what many women who entertain define themselves by. The aspirational buyer is who Sunbeam needs to attract yet this completely escapes them due to their myopic focus on product, not experience of using the device.

Fourth, all of the weaknesses of the methodology including a faulty sampling frame, the complex approach to defining the product dimensions, in addition to being too broad on pricing elasticity analysis leads to the analysis pointing them to unprofitable products. While the paper celebrates the barely 2% market share gain this project is a failure. It has allowed the most price-sensitive, feature-demanding customer to dictate product strategy.

Q2. What would you do differently to minimize the weakness ?

Sunbeam needed to first choose a better methodology and have a more thought-out sampling frame to avert his study driving them into a product strategy that will invite price wars with larger, more respected competitors in their core markets. Sunbeam needs to go back and completely revamp; the methodology, the definition of arrays and product dimensions and focus on what is going to capture the higher-end aspirational buyer who is passing them by. They don't understand the aspirational buyer's core requirements because they can't find them with their existing way of doing research. Finally the conjoint analysis, if plotted in multi-dimensional scaling-based grids and graphics, would show their product strategies are actually perpetuating commoditization, not solving it (Green, Krieger, Carroll, 1987). On top of all of these issues the study completely disregard what husbands' and children's roles are in food process selection and purchasing decisions, where durability and safety are key.