Conjoint Analysis of Strategic Preferences by Managers and Latent Class Regression Modeling of Firm Performance in Consumer Goods Industries in India

  • Vasudevan Sundararajan

Abstract

Conjoint analysis and brand-price-feature tradeoff analysis is traditionally used to study consumer preference structure for products and services. The same methodology can be used to study manager’s (SBU Heads) trade-off analysis of strategic preferences.  In this study, 13 sets of strategy variables are ranked by managers to show their preferences for different combinations of strategies by using a non-metric full profile based conjoint analysis model. Based on a componential segmentation of the strategic utilities obtained from conjoint analysis, a strategic typology was obtained. Later, a disaggregated latent class model was run using strategic clusters, competitive environmental clusters, intensity of rivalry, industry characteristics, type of industries, concentration, employee size and entry / exit conditions and their joint impact on market and financial performance variables. A complex combination of strategies was related to market and financial performance variables. Strategic firms consisting of global players with cost and quality leadership strategies, narrow urban focus operating in slow growth markets, moderately competitive environments with greater degrees of brand differentiation and favorable oligopoly coordination posted high market and financial performance. Firms using multiple sub-brands, challenger strategies with reactive behavior along with technology leadership and VFM pricing strategies operating in slow growth markets, moderately competitive environments were stuck in the middle firms in terms of market and financial performance. Firms following mega umbrella brand strategy with skimming prices, defensive and preemptive strategies operating in dynamic volatile markets posted high market performance and poor financial performance. Various recommendations are made based on the study results.

Published
2020-10-01
Section
Articles