Marketing Analytics homework, answer question c, d, e, and f

Best Motor Works (BMW) competes in the luxury car market. Your Market Research Team have conducted a study on 1,500 respondents using choice-based conjoint analysis for three attributes, each attribute has two levels (Refer Data): Attribute b1 (Price) $65,000 $85,000 Attribute b2 (Brand) Buzzy Beaut Attribute 3 (Number of Doors) 2 door sports convertible 4 door family sedan The alternatives in the questionnaire are presented in Table 1: Table1: Alternatives in the Conjoint Analysis for BMW Price Number of Alternatives ($1,000) Brand Doors bo b1 b2 b3 1 65 Buzzy 2 door 2* 65 Buzzy 4 door 3 65 Beaut 2 door 4* 65 Beaut 4 door 5 85 Buzzy 2 door 6* 85 Buzzy 4 door 7* 85 Beaut 2 door 8 85 Beaut 4 door Note: *existing product structure To generate an informed report for BMW: (a) Calculate the partworths and covert the partworths to dollar values for a 4 door Beaut family sedan that is priced at $85,000. Comment on your results. (b) Estimate the market shares (choice probabilities) for all eight alternatives. Comment on your results. (c) Explain the limitations of conjoint analysis to estimate market shares. (d) Re-estimate the market shares, given that in the current market there are only four alternatives (2, 4, 6, and 7)* (e) Given that BMW is considering adding to this market, one of the remaining alternatives (1, 3, 5 or 8), determine which alternative is the best for BMW to add to the market by re-estimating the market shares after the addition of each new alternative. (1) Based on the re-estimated market shares in part (e), provide informed recommendations to the best of your marketing knowledge about potential consumer trade-off based on attributes of the recommended new alternative. (1) (2) (3) In other words, should BMW: keep the current four alternatives and not introduce the new alternative introduce the new alternative to replace one of the existing alternatives introduce the new alternative in addition to the current four alternatives The data is from a choice based conjoint experiment. There are three attributes. Attribute bi Price Attribute b2 Brand Attribute b3 Number of Doors Each has two levels: Price (i) $65K (ii) $85K Brand (i) Buzzy (ii) Beaut Doors (i) 2 door (ii) 4 door Each choice set contains three alternatives Table 1: Alternatives in the conjoint analysis for BMW Alternatives Price ($1,000) Brand Number of Doors bo b1 b2 b3 1 $65 Buzzy 2 door 2* 0 $65 Buzzy 4 door 3 0 $65 Beaut 2 door 4* 0 $65 Beaut 4 door 5 0 $85 Buzzy 2 door 6* 0 $85 Buzzy 4 door 7* 0 $85 Beaut 2 door 8 0 $85 Beaut 4 door Note: *existing product structure A B D E F 1 Each choice set contains three alternatives 2 Respondents Choice Set Choice 3 Set 1 Set2 Set3 4 1 6 2 4 3 5 2 7 2 3 1 6 3 2 5 1 1 7 4 3 7 5 2 8 5 5 6 3 2 9 6 6 8 3 2 10 7 4 2 3 2 8 3 4 6 3 12 9 7 1 4 3 13 10 1 5 8 3 14 11 6 4 5 3 15 12. 7 1 3 3 16 13 6 3 2 3 17 14 3 7 8 3 18 15 7 2 3 1 19 16 1 3 8 3 20 17 4 7 8 3 3 21 18 3 8 8 5 1 22 19 4 8 1 3 23 20 2 4 3 2 24 21 8 4 1 3 25 22 8 6 5 2 26 23 6 1 8 3 27 24 4 6 7 2 28 25 6 1 4 3 29 26 2 8 4 3 30 27 1 6 5 w P 31 28 7 2 4 32 29 6 5 00 3 33 30 7 4 1 3 34 31 00 4 3 3 35 32 5 8 1 3 36 33 7 4 6 3 37 34 00 5 2 3 . B D E F G 1470 1467 5 2 1 2 1468 4 2 1 1 1471 1472 1469 5 1 3 3 1473 1470 6 7 1 3 1474 1471 6 3 4 1 1475 1472 6 4 2 2 1476 1473 5 3 2 3 1477 1474 5 3 6 1 1478 1475 8 4. 6 3 1479 1476 7 5 1 3 1480 1477 3 6 5 1 1481 1478 1 4 2 1 1482 1479 5 3 4 2 1483 1480 5 1 3 1 1 1484 1481 1 2 3 1 1 1485 1482 5 6 4 2 1486 1483 5 7 3 2 2 1487 1484 4 5 1 1 1488 1485 6 8 3 2 1489 1486 5 2 4 1 1490 1487 8 1 4 1 1491 1488 6 7 1 3 1492 1489 1 6 3 1 1493 1490 4 7 8 8 1 1494 1491 2 2 6 7 1 1495 1492 5 1 3 2. 1496 1493 1 6 2 1 1 1497 1494 3 6 1 1 1498 1495 3 6 5 1 1499 1496 7 8 5 3 1500 1497 4 8 7 1 1501 1498 2 6 5 1 1502 1499 6 5 7 1 1503 1500 5 7 4 3 Best Motor Works (BMW) competes in the luxury car market. Your Market Research Team have conducted a study on 1,500 respondents using choice-based conjoint analysis for three attributes, each attribute has two levels (Refer Data): Attribute b1 (Price) $65,000 $85,000 Attribute b2 (Brand) Buzzy Beaut Attribute 3 (Number of Doors) 2 door sports convertible 4 door family sedan The alternatives in the questionnaire are presented in Table 1: Table1: Alternatives in the Conjoint Analysis for BMW Price Number of Alternatives ($1,000) Brand Doors bo b1 b2 b3 1 65 Buzzy 2 door 2* 65 Buzzy 4 door 3 65 Beaut 2 door 4* 65 Beaut 4 door 5 85 Buzzy 2 door 6* 85 Buzzy 4 door 7* 85 Beaut 2 door 8 85 Beaut 4 door Note: *existing product structure To generate an informed report for BMW: (a) Calculate the partworths and covert the partworths to dollar values for a 4 door Beaut family sedan that is priced at $85,000. Comment on your results. (b) Estimate the market shares (choice probabilities) for all eight alternatives. Comment on your results. (c) Explain the limitations of conjoint analysis to estimate market shares. (d) Re-estimate the market shares, given that in the current market there are only four alternatives (2, 4, 6, and 7)* (e) Given that BMW is considering adding to this market, one of the remaining alternatives (1, 3, 5 or 8), determine which alternative is the best for BMW to add to the market by re-estimating the market shares after the addition of each new alternative. (1) Based on the re-estimated market shares in part (e), provide informed recommendations to the best of your marketing knowledge about potential consumer trade-off based on attributes of the recommended new alternative. (1) (2) (3) In other words, should BMW: keep the current four alternatives and not introduce the new alternative introduce the new alternative to replace one of the existing alternatives introduce the new alternative in addition to the current four alternatives The data is from a choice based conjoint experiment. There are three attributes. Attribute bi Price Attribute b2 Brand Attribute b3 Number of Doors Each has two levels: Price (i) $65K (ii) $85K Brand (i) Buzzy (ii) Beaut Doors (i) 2 door (ii) 4 door Each choice set contains three alternatives Table 1: Alternatives in the conjoint analysis for BMW Alternatives Price ($1,000) Brand Number of Doors bo b1 b2 b3 1 $65 Buzzy 2 door 2* 0 $65 Buzzy 4 door 3 0 $65 Beaut 2 door 4* 0 $65 Beaut 4 door 5 0 $85 Buzzy 2 door 6* 0 $85 Buzzy 4 door 7* 0 $85 Beaut 2 door 8 0 $85 Beaut 4 door Note: *existing product structure A B D E F 1 Each choice set contains three alternatives 2 Respondents Choice Set Choice 3 Set 1 Set2 Set3 4 1 6 2 4 3 5 2 7 2 3 1 6 3 2 5 1 1 7 4 3 7 5 2 8 5 5 6 3 2 9 6 6 8 3 2 10 7 4 2 3 2 8 3 4 6 3 12 9 7 1 4 3 13 10 1 5 8 3 14 11 6 4 5 3 15 12. 7 1 3 3 16 13 6 3 2 3 17 14 3 7 8 3 18 15 7 2 3 1 19 16 1 3 8 3 20 17 4 7 8 3 3 21 18 3 8 8 5 1 22 19 4 8 1 3 23 20 2 4 3 2 24 21 8 4 1 3 25 22 8 6 5 2 26 23 6 1 8 3 27 24 4 6 7 2 28 25 6 1 4 3 29 26 2 8 4 3 30 27 1 6 5 w P 31 28 7 2 4 32 29 6 5 00 3 33 30 7 4 1 3 34 31 00 4 3 3 35 32 5 8 1 3 36 33 7 4 6 3 37 34 00 5 2 3 . B D E F G 1470 1467 5 2 1 2 1468 4 2 1 1 1471 1472 1469 5 1 3 3 1473 1470 6 7 1 3 1474 1471 6 3 4 1 1475 1472 6 4 2 2 1476 1473 5 3 2 3 1477 1474 5 3 6 1 1478 1475 8 4. 6 3 1479 1476 7 5 1 3 1480 1477 3 6 5 1 1481 1478 1 4 2 1 1482 1479 5 3 4 2 1483 1480 5 1 3 1 1 1484 1481 1 2 3 1 1 1485 1482 5 6 4 2 1486 1483 5 7 3 2 2 1487 1484 4 5 1 1 1488 1485 6 8 3 2 1489 1486 5 2 4 1 1490 1487 8 1 4 1 1491 1488 6 7 1 3 1492 1489 1 6 3 1 1493 1490 4 7 8 8 1 1494 1491 2 2 6 7 1 1495 1492 5 1 3 2. 1496 1493 1 6 2 1 1 1497 1494 3 6 1 1 1498 1495 3 6 5 1 1499 1496 7 8 5 3 1500 1497 4 8 7 1 1501 1498 2 6 5 1 1502 1499 6 5 7 1 1503 1500 5 7 4 3