What is Conjoint Analysis?

Conjoint analysis is a survey technique and discrete-choice model used in market research to measure consumer preferences for products and services. It has been widely used in quantitative market research for over 50 years and is the subject of an enormous amount of academic research.

Applied Marketing Science, Inc. (AMS) has been involved in dozens of class action studies where conjoint analysis has been used in support of plaintiffs to grant class certification. Many of these cases have gone on to achieve favorable settlements.

Conjoint Analysis as a Basis for Damages Calculations

When looking at using conjoint analysis for class action surveys, there are several important outputs from the analysis that can be used as a basis for damages calculations, such as reduction in market value and price premium. 

Reduction in market value: How much less money a consumer would have paid if they had known they would not receive a promised feature at the time of purchase or if they had known a feature they were promised was defective.
Price premium: How much more money a consumer may have paid due to a misleading or omitted claim or label on a product.

How Does the Conjoint Analysis Method Work?

In a survey setting, respondents are presented with a series of choice tasks that break down a product into its attributes and levels of those attributes.

Attributes: The features that make up or describe a product. 

Levels: The specifications of those attributes. 

Conjoint Pillar Page Update Nov 2023 - Graphics (1920 x 600 px) (4)

It is important that the model includes the attribute of interest in the class action case, such as a scenario with and without a vehicle defect, or with and without the misleading or omitted product label. Other distractor attributes are added to the design of the conjoint survey to ensure that the survey is not leading respondents to know the purpose of the study.  

Below is an example of a hypothetical conjoint choice task involving labeling claims on a snack bar. Conjoint Pillar Page Update Nov 2023 - Graphics (4)

Below is an example of a hypothetical conjoint choice task involving a vehicle defect. Conjoint Pillar Page Update Nov 2023 - Graphics (3)-1

Considerations When Conducting Conjoint Analysis

When deciding whether to use conjoint analysis as a research methodology for your class action litigation matter, it is important to consider a few things to avoid potential points of criticism. This includes (but is not limited to) the following: 

  • Working with a testifying survey expert and research firm that are well-versed in survey and analysis methods.  
  • Working with economists who know the right ways to use the results of a conjoint analysis, specifically for class action matters. 
  • Choosing the right attributes and levels for a conjoint study that accurately describe the product. 

Considerations When Designing a Conjoint Analysis Survey

In the context of litigation matters, surveys and survey experts are routinely criticized for the decisions made and the methodologies used in the survey’s design. When deciding whether conjoint analysis is appropriate for your class action case, there are a number of factors to consider. Among them are the following: 

  • Can the relevant consumers or decision makers be identified, and can they be interviewed in sufficient numbers? 
  • Can the set of products at issue be described by one conjoint survey? 
  • Can the relevant consumers understand and evaluate the attributes and the product? 
  • Can enough attributes be identified to include in the conjoint exercise? 
  • What prices should be included in the survey? 

Drivers of Cost and Time in Conjoint Analysis Surveys

Conjoint analysis is a complex process that can take time to do right and can be a costly endeavor. 

 Finding customers who meet qualifications could add time and cost to a study. Generally speaking, the more difficult these consumers are to reach, the more expensive they will be to recruit in the numbers needed for a quantitative study.
There may also be more than one product at issue. If the set of products at issue cannot reasonably be described by one conjoint survey, this may drive up complexity and create additional costs.

What Stage the Class Action Lawsuit is in Can Also Drive Costs

Depending on whether or not the class has been certified for a class action civil suit, the conjoint analysis methodology may be employed for different purposes.  

Prior to class certification, the expert may design a conjoint survey for a methodology report or what AMS refers to as an ‘I Promise’ declaration. If the class has been certified, all stages of conjoint analysis research and a full expert report may need to be completed. If the class certification deadline has already passed, the expert may need to use a conjoint survey for rebuttal support.Conjoint Pillar Page Update Nov 2023 - Graphics (5)

Strategic Considerations: Pilot Survey(s), Early Case Assessment, and Settlement Reports

Companies and attorneys are under increasing pressure to both mitigate litigation risks and control litigation costs. Early Case Assessment, pilot survey(s), and settlement reports are methods that can help achieve these goals by informing early case strategy, mitigating litigation risks, or providing input to drive settlement. 

What is Early Case Assessment? 

Early Case Assessment can help counsel identify the relevant facts, evaluate their potential implications, and chart an appropriate case strategy.  

How Pilot Surveys Can be Used in Early Case Assessment 

  • Pilot surveys, also known as pilot testing, can play a critical role in Early Case Assessment for class action matters, especially in class action litigation where conjoint analysis is being used as the basis for damages calculations.
  • Pilot surveys for conjoint analysis provide an initial read on the data to inform subsequent actions. Here, the conjoint survey is run on a smaller scale to estimate a price premium or reduction in market value.
  • When conducting any pilot testing, consider engaging a consulting survey expert to maintain privilege throughout this phase.
  • Pilot surveys offer the benefit of providing preliminary results without incurring the cost and time typically needed for a full-scale consumer survey design and expert report. 

When to Produce a Settlement Report vs. a Full Expert Report:  

In some cases, a report of the preliminary findings may be sufficient to drive or inform mediation or settlement decisions in class action matters. AMS can provide a verbal report of findings, or other supporting materials as requested, to support mediation efforts.  

In other cases, a full litigation expert report and expert testimony at the class certification or merits stage might still be necessary; in this scenario, you may want to consider retaining a testifying survey expert. 

What is Needed to Begin a Conjoint Analysis?

It is important to consider some of the documents and information that may be needed to help with the conjoint survey design as a basis for calculating damages in a civil suit. 

These types of materials include (but are not limited to) the following: 

  • Accurate descriptions of the defect, labels, or claims at issue, as well as the consequences of the product defect, or the omitted or misleading label.  
  • Information about the product and product category.  
  • Access to sales and pricing data from in-market data sources, such as Circana (previously ‘IRI’) pricing data. 

There are benefits to having as much information about the product, the defect or label at issue, and marketing material in order to design a defensible conjoint study.    

Key Takeaways

Choice-based conjoint analysis has been used successfully as a basis for damages calculations in state and federal class action matters when properly conducted, and its use has grown significantly as an accepted methodology over the last decade. 

It is important to seek the help of an experienced survey expert, survey support team, and economist who are all well-versed in conjoint analysis for class action litigation.  

Conjoint analysis surveys can provide persuasive evidence, but only when designed and conducted with scientific rigor, and supported by clear, authoritative expert testimony that can minimize the risk of critiques, including a Daubert challenge.

Additional Resources

Webinar 

Case Studies 

Blog Posts 

Find more blog posts related to conjoint analysis here. 

 

Have questions about conjoint analysis surveys?

Contact AMS Principal and Survey Expert Patricia Yanes to discuss.

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