Dealing with Product Similarity in Conjoint Simulations

One of the reasons conjoint analysis has been so popular as a management decision tool has been the availability of a choice simulator. These simulators often arrive in the form of a software or spreadsheet program accompanying the output of a conjoint study. These simulators enable managers to perform ‘what if’ questions about their market - estimating market shares under various assumptions about competition and their own offerings. As examples, simulators can predict the market share of a new offering; they can estimate the direct and cross elasticity of price changes within a market, or they can form the logical guide to strategic simulations that anticipate short- and long-term competitive responses (Green and Krieger 1988).