earlyriders conjoint analysis
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EARLYRIDERSCONJOINT ANALYSIS
03/2015 Team 15
AGENDA
EXECUTIVE SUMMARY
SEGMENTATION PORTOFOLIO
EarlyRiders is a relatively small toy company that specializes in the manufature of quality toy horses. Facing fierce competition from the other firm, EarlyRiders is primarily interested in understanding market preferences in order to reform the product line. A conjoint study has been commissioned is to kid-parent pairs on four most important attributes the firm is considering: price, height, motion and style.
Price Height Motion Style
$139.99 26’’ Rocking Glamorous
$119.99 18’’ Bouncing Racing
EXECUTIVE SUMMARY
Finding Highlights:The firm underperformed because the product offerings went against market preference for large size.Kid boys and girls have different preference for motion, style and price (parents).The market is perfectly segmented into four preference based clusters.
Recommendations:Assuming the competitor will not expand or change its product line but could possibly lower the price, we recommend EarlyRider offer two types of toy horses :Design: 26’’ racing bouncing horse (male), 26’’ glamorous rocking horse (female)Pricing: Start at $139.99 and lower to $119.99 when the competitor lower the price; Realize cooperation on high price level by competitive interactions.
A priori segmentation analysis
SEGMENTATIONPost hoc segmentation analysis
A Priori Segmentation Analysis – by genderratings ~ (price + height + motion + style) * gender
-------------------------------------------------------------------------------------------------------------------------------• desmat1 = price desmat2 = height desmat3= motion desmat4 = style• base value: female, $139.99, 18”, bouncing, racing
Coefficients on the interactions interpret how much boys’ preference different from girls’.
We can segment the market based on gender, because boys and girls have significant preference for price, motion and style.
The whole market has a taste for large size toy horses.
A Priori Segmentation Analysis – by gender
40%
60%
“My parents are sensitive to price. Bouncing is great. I like to race!”
“Rocking is fun but not very much important. I want my horse looks glamorous!”26” racing bouncing
horse26” glamorous rocking
horse
-------------------------------------------------------------------------------------------------------------------------------• desmat1 = price desmat2 = height desmat3= motion desmat4 = style• base value: female, $139.99, 18”, bouncing, racing
Post Hoc Segmentation Analysis – k-means
35%
22%
28%
15%
Group AGroup BGroup CGroup D
The market is perfectly
segmented into 4 preference based clusters.
Post Hoc Segmentation Analysis – k-means
The Stingy Rocking Lovers Standard Racers Bulky LoversA B C D
Parents are highly price sensitive, while kids know well what they want
Buy rocking horses and want them look glamorous
Would love low prices but no extreme preference
Height is all
Simulated market test
PORTOFOLIOSELECTION
Market Simulation Strategy
Scen 1In the current market, there are three products offered:No.3 and No.4 (EarlyRiders) No.7 (competitor).
Scen 2 According to segmentation architecutre by gender, EarlyRiders offer No.13 and No.16. Competitor has to lower price to keep presence.
Scen 3Parents of kid girls are not that price sensitive. What if EarlyRiders charge girl segment higher price?
Scen 6Sales in “Standard Racers” are not enough to make profits, what if EarlyRiders cut No.15 to save costs.
Scen 5According to segmentation architecture by preference, EarlyRiders offer No.13, No.16, No.14, No.15. Competitor has to lower price.
Scen 4As analyzed, motion type doesn’t significant impact girls’ decisions. How about cut the cost by offering kid girls bouncing horses?------------------------------------------------------------------------------------------------------------------------
-------* See the product profiles in appendix
ROI Market Share
ROI Market Share
ROI Market Share
ROI Market Share
ROI Market Share
ROI Market Share
0
50000
100000
150000
200000
250000
300000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3444.5
175265 173618.5137523.5
156212.5 162465
244915.5
2749546741.5
74236.5
13747.5 27495
0.138 0.875 0.798 0.662 0.9375 0.750.862 0.125 0.212 0.338 0.0625 0.25
EarlyRiders Competitor
RecommendationsReplace the current product line with 26’’ bouncing racing horse and 26’’ rocking glamorous horse. Start at $139.99 and lower to $119.99 when the competitor lower the price.Realize cooperation on high price level by competitive interactions.
Apply difference in preference to message and media selection for promotion.
$234,970 increaseThat’s a lot of money
HUGE SUCCESS!
87% market shareA good market presence
APPENDIXAll the data and analysis is processed in R
Code Script & Output http://rpubs.com/christine07dr/125237
Prdocut Profile List
Profile No. Price Height Motion Style
1 $139.99 18’’ Bouncing Racing
2 $139.99 18’’ Bouncing Glamorous
3 $139.99 18’’ Rocking Racing
4 $139.99 18’’ Rocking Glamorous
5 $139.99 26’’ Bouncing Racing
6 $139.99 26’ Bouncing Glamorous
7 $119.99 26’ Rocking Racing
8 $119.99 26’ Rocking Glamorous
9 $119.99 18’’ Bouncing Racing
10 $119.99 18’’ Bouncing Glamorous
11 $119.99 18’’ Rocking Racing
12 $119.99 18’’ Rocking Glamorous
13 $119.99 26’ Bouncing Racing
14 $119.99 26’ Bouncing Glamorous
15 $119.99 26’ Rocking Racing
16 $119.99 26’ Rocking Glamorous
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