Price response function with and without choice set information by two-staged conjoint analysis in the denim jeans market

The primary purposes of this study were to develop a new methodology for calibration of the continuous price response function and to compare differences in the price response functions with and wdthout choice set information. The new methodology, identified as the two-staged conjoint analysis, incorporated the logit transformation into the conjoint analysis and added the choice set formation step in the conjoint questionnaire.

Two conjoint models were specified to compare the differences in the price response functions with and without choice set information. These two models were tested in a study of the denim jeans market. Participants included 103 students at a major state-supported southern university. In a conjoint model, the independent variables consisted of brand, price, color, and style, while the dependent variables were equal to each respondent's purchase intention data. The two-staged conjoint questionnaire consisted of three steps. Step one provided respondents with both a written and a visual description of two randomly selected styles and colors of denim jeans. In step two, respondents were asked to choose the combination of attributes they intended to purchase. In step three respondents were asked to rate each combination chosen at step two on a scale of 1-100, with one as least likely to be purchased and 100 as most likely to be purchased.

Three research questions were developed to accomplish the purposes of this study. These questions were intended to; (1) examine the differences in the price response function among brands; (2) compare the differences in the price response functions with and without choice set information; and (3) compare the optimal price of the price response functions with and without choice set information for each brand. A variety of statistical methods, including ANOVA, t-test, and regression analysis, were employed to analyze the research questions. The results of ANOVA revealed no significant differences in the purchase probabilities among the eight identified brands at $20, $40, $60, and $80. However, results of the t-test and price elasticity showed that the price response functions with and without choice set information had different price response structures. The different shapes of the price response functions with and without choice set information resulted in the differences in optimal price.