Guiding New Product Development Pricing in an Automotive High Tech SME: When customer preferences are critical to strategic decisions using Conjoint Analysis adds needed precision to model formulation validation

摘要

This paper describes the use of system dynamics in combination with conjoint analysisto assist a high tech SME in evaluating different policy options in a context wherecustomer preferences were critical to strategic decision making. Conjoint analysisserved an important role in eliciting customers’ underlying multi-attribute choicepreferences, and had a significant impact on both the structure and parameterization ofthe final simulation model. The combination of methods was quite powerful in this caseand we feel could be successfully applied to a broad class of problems where behavioralpolicies of decision makers include tradeoffs among multiple attributes. In such cases,conjoint analysis- or other methods developed to address the multi-attribute choiceproblem- can add needed precision to model formulation and validation. The alternativeis to use SD as a stand-alone approach and employ formulations that are not empiricallyderived or grounded in the extensive choice theory literature. We suggest thisalternative is not viable when choice preferences are important for guiding strategicdecisions, and more generally we contend that appropriately integrating relevantmethods can substantially improve our system dynamics models and policy analysis.