Preference share simulation allows you to simulate shares of preference for different market offerings. Specifically, you need to describe offerings that are available on the market in the language of the attributes and levels that you chose to include in the study, and the system will estimate the percentages of preferences for these offerings. Please keep in mind that:

  • If you would like to test out a new product, add it to the list of existing concepts.
  • If two or more offerings share exactly the same levels, input each offering separately. For example, if there are two brands each offering identical products, put in both brands in two separate lines.
  • The market shares are only approximate and may be affected by constrained availability of some products (e.g., not available in all geographies), shelf space (in case of FMCG).

For example, you can specify these three offerings to see approximate shares of preference:

Brand Monthly fee Mobile data inclusion International calls inclusion SMS inclusion Share of preference
Telstra $49.00 500MB 0 min 300 messages 30%
Vodafone $39.00 10GB 90 min Unlimited text 20%
Optus $45.00 Unlimited 300 min Unlimited text 25%
None of the above 25%
Total 100%

Models for calculating market shares

There are two models for calculating market shares:

  • Share of preference model, which is appropriate for low-risk or frequently purchased products: FMCG, software, etc. This model is applicable in the vast majority of applications.
  • First choice model, which is suitable for high-risk or seldom purchased products: education, life insurance, pension plans, etc.

Excel simulator

For each conjoint study on, one of the outputs we provide is an Excel profitability model (also known as CBC simulator). By letting you simulate the market environment, it lets you estimate the profitability of your new product development (NPD). These calculations are based on a simple model:

Contribution margin (profit) = Marginal net revenue × Sales volume

Here is how it works:

Example: Specify marginal costs and revenues

Step 1. Specify marginal costs and revenue for each level:

  • Marginal revenue is typically the price you receive from customers for your product. For example, “price of $45”, $45 will typically be your marginal revenue.
  • Marginal cost is how much it costs you to deliver this level. It might make sense to choose the least costly level of each attribute as baseline (0 marginal cost) and assign marginal costs to the other levels of that attribute.

Example: Specify current market players

Step 2. Describe the current market landscape in the language of attributes and levels. Include both your current competitors, as well as any of your own products. We will estimate market shares based on the responses of the experiments’ participants. They might not necessarily match actual market shares, because they do not take into account things like distribution, promotions, etc. However, if you specified the key drivers of customer behaviour among your attributes and if you specify all the main products, the simulated market shares should be close to reality.

Example: Find optimal NPD