Conjoint Analysis

This article discusses conjoint analysis and how this research technique may have been used by OMDS to determine the features  in the new OM-5 camera. Some folks are up in arms about certain attributes of the OM-5. Like using the same sensor as in the E-M1 Mark III, maintaining the older menu, and using an older USB Micro connector. As is often the case, the wish list that consumers may have for a new product can be totally unrealistic given business realities. It is prudent to remember that no camera is perfect, and that all things photographic come with some kind of trade-off.

NOTE: Click on images to enlarge. Photographs have been added to serve as visual breaks.

OM-D E-M1X + M.Zuiko PRO 7-14 mm f/2.8 @ 7 mm, efov 14 mm, f/4, 1/60, ISO-200

Products are not developed in a vacuum.

Reading some online comments and related emotional venting that is happening at the moment, one could assume that some people think that new product development is a simple task that is based on arbitrary decisions. Nothing could be further from the truth.

Bringing a new product to market in various industries can cost a minimum of hundreds of thousands of dollars… with these costs easily reaching into the millions depending on the product. It takes a significant amount of market research and understanding to successfully bring a new product to market.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, +0.3 EV, 1/2000, ISO-1250, Pro Capture L, Bird Detection AI, cropped to 3238 pixels on the width, subject distance 65 metres

Products begin with market segmentation.

To be effective, companies typically spend time doing market segmentation. This is the process of breaking down a market into subgroups. These subgroups would have common attributes which distinguishes them from other subgroups.

There are a number of types of market segmentation that are commonly used. These include demographics, psychographics, geographic, technological, transactional, behavioural, and so on. Companies use the segmentation strategies that are best aligned with their fundamental business and marketing strategies. If we look at the camera market we can see how various types of market segmentation can be used.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, 1/5000, ISO-6400, Pro Capture H, cropped to 3946 pixels on the width, subject distance 1.7 metres

Demographics. Camera companies could assess the size of the market based on the age of photographers. Gender. Income levels. Education. Occupation. Family orientation. Religion. Ethnicity. Based on typical camera club membership it appears to me that buyers of interchangeable lens cameras skew to older age groups with higher levels of disposable income.

Psychographic. This type of segmentation creates subgroups based on how consumers think. Attitudes and values are commonly assessed when using psychographic segmentation. Lifestyle, belief systems, social status, and personal motivations are some of the other factors that may come into play.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, 1/1600, ISO-800, Bird Detection AI Subject Tracking, Pro Capture L, cropped to 4632 pixels on the width, subject distance 38.6 metres

Geographic. This is segmentation based on variables such as location. Cultural preferences. Language. Climate and seasonality. Rural versus urban environments can also be assessed. After Japan Industrial Partners (JIP) acquired Sony’s VIAO computer business the company made a decision to segment the market geographically and concentrate on business computer users in Japan.

The reason why this geographic segmentation was chosen could be related to the additional costs to have a broader geographic emphasis, as well as anticipated sales volumes, contribution margins, breakeven points, and profitability estimates.

OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 @ 150mm, efov 300 mm, f/2.8, 1/60, ISO-4000, in-camera focus stacking, subject distance 980 mm

It is very likely that given the thin margins available in the computer business that JIP decided it would be more profitable with VIAO by focusing on the Japanese market.

Behavioural. The vast majority of businesses use behavioural segmentation. This type of segmentation examines factors like spending habits, purchasing habits, interactions with brands, and benefits desired.

OM-D E-M1X + M.Zuiko 12-100 mm f/4 IS @ 16 mm, efov 32 mm, f/4, 1/320, ISO-500

Technological. This type of segmentation divides the market into subgroups based on their interest in, and use of various technologies. Examining the computational photography technology that is built into their cameras, it is clear to see how Olympus/OM Systems has been pursuing technological segmentation.

As noted in some of my previous articles, it is my belief that OMDS has shifted into a Niche Differentiation strategy with the OM-1 being a clear statement in this regard.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS @ 400 mm, efov 800 mm, 1/5000, f/11, -0.3 EV, ISO-6400, Pro Capture H, cropped to 3243 pixels on the width, subject distance 3.9 metres

What market segments is OMDS targeting?

Comments from OMDS executives and OM Ambassadors have indicated that the company is targeting the nature/wildlife/birding markets as well as adventure travel.

If we look at product and brand attributes of Olympus/OM System products we can see why these target markets make sense for OMDS. Industry leading weather sealing. Supersonic Wave Filter dust reduction. Comparatively smaller size and weight. Outstanding IBIS performance reducing/eliminating the need for tripod use. Computational photography technologies like Bird Detection AI Subject Tracking, Live ND, Handheld Hi Res, Starry Sky, Focus Stacking and Bracketing, and Live Composite.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/5.6, 1/1600, ISO-2500

How does market segmentation help determine product mix and configurations?

Once a company like OMDS does its segmentation research it can lead to fundamental business decisions when the following types of questions are answered.

  • What are the sizes of the bird, nature, wildlife and adventure photography markets in terms of annual sales volumes of camera bodies and related lenses?
  • What level of market penetration do we currently have in these target segments?
  • What is the market share potential of our product(s) in the target segment(s)?
  • What product performance attributes are important to buyers in these individual market segments?
  • What attitudinal factors are common with buyers in these individual target segments?
  • How much money are people in these target segments willing to spend on cameras and related lenses?
  • How often do people in these target segments upgrade their camera bodies and lenses?
  • What lens configurations do consumers in these target market segments desire? What products are desired but do not currently exist?
  • What product features and capabilities are most highly valued?
  • How do buyers in the target segments rank order these product features and capabilities in terms of importance?

These questions are only a small sampling of what a manufacturer would want to know and quantify.

OM-D E-M1X + M.Zuiko 60 mm f/2.8 macro, f/5.6, 1/50, ISO-200, handheld in-camera focus stacking

What is conjoint analysis?

Conjoint analysis is a quantitative research technique that was first proposed by mathematicians Duncan Luce and John Tukey in 1964. It has been used commercially since the 1970s.

In a nutshell, conjoint analysis is a research technique used to quantify how consumers value various features of a product or service. Product attributes can be grouped in multiple ways and rated by research participants. By analyzing the quantitative data companies can determine what trade-offs buyers are willing to make to acquire the specific product attributes that they most highly value.

Conjoint analysis can also be used to establish the price elasticity of various product configurations… i.e. how much consumers would be willing to spend for a particular set of product features.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, 1/5000, ISO-1250, Pro Capture H, cropped to 3840 pixels on the width, subject distance 10.4 metres

If we ponder the needs of photographers who are heavily involved with the photographic genres of nature/wildlife/birding and adventure travel, we can understand the importance of using conjoint analysis. It helps to quantify the exact combination of features and capabilities that should be included in a particular camera model like the OM-5.

Obviously a company needs to differentiate its various models so it does not cannibalize sales of higher margin products and destroy its profitability. It is always good to remember that companies are not charities. They need to make a profit to survive.

OM-D E-M1X + M.Zuiko PRO 12-100 mm f/4 IS @ 17 mm, efov 34 mm, f/4, 1/400, ISO-200

How is conjoint analysis done?

There are a number of approaches that can be used with conjoint analysis so we won’t go into all of them in this article. One of the most common approaches is choice-based conjoint. My guess is that this was likely used by OMDS to establish the feature set of the new OM-5 camera. An earlier article outlined my views on the OM-5 strategic intent. We won’t rehash that information in this article.

E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-14 teleconverter @ 210 mm, efov 420 mm, f/5, 1/400, ISO-16000, subject distance 2.3 metres

It is likely that OMDS would have created a comprehensive listing of individual product attributes including:

  • sensor resolution, dynamic range, colour depth, noise reduction
  • handling and ergonomics (perhaps with specific details on external body controls)
  • number of card slots and card type
  • frame rates
  • menu format and display
  • weatherproofing
  • IBIS performance
  • physical wiring connections
  • battery size and performance
  • EVF characteristics
  • rear screen attributes including resolution, touch screen, and articulation
  • size, weight and cost
  • availability of various computational photography technologies
  • construction material
  • sensor dust cleaning
OM-D E-M`X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-20 teleconverter @ 800 mm, efov 1600 mm, f/13, -0.3 EV, 1/1600, ISO-4000, Bird Detection AI Subject Tracking, cropped to 4616 pixels on the width, subject distance 137.9 metres

Obviously the list could include many more individual factors than are listed above. A number of differentiated purchase options along with pricing would be created. Consumers would then review the various options and rate each one in terms of their relative individual preference, and the price level at which they would purchase that option.

By analyzing the data on the various options, researchers can then identify specific attribute trade-offs that would result in the optimal product configuration preferred by the target market… that could be sold within an acceptable market price range.

OM-D E-M1X + M.Zuiko 100-400 mm with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, 1/1600, ISO-2500, Pro Capture L, Bird Detection AI Subject Tracking, cropped to 3250 pixels on the width, subject distance 57.5 metres

The optimal product configuration would need to fit within physical manufacturing parameters of the company, and be able to be built at a cost that would produce the desired contribution margin per unit based on a target selling price.

The per unit contribution margin would then be divided into the fixed costs for that product. This would establish the breakeven point in terms of the number of units needed to be sold. That proposed breakeven point would be evaluated against market segment size and market share potential to determine the viability of a specific product.

OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-14 teleconverter @ 210 mm, efov 420 mm, f/4, 1/80, ISO-1000, handheld in-camera focus stacking, subject distance 1.2 metres

Let’s go full circle and tie all of this back to some people moaning incessantly about the OM-5 not having a new sensor. Or not using the same menu as the OM-1. Or having an older USB cable connection. Or any one of a number of other individual complaints.

Executives that run companies do not intentionally make stupid decisions. Nor do they act in a cavalier fashion and arbitrarily add or subtract product features on a whim. They do their level best to offer their target customers the optimal product configuration that meets their customers’ needs, and at a price those customers are willing to pay.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, -0.7 EV, 1/1600, ISO-320, Bird Detection AI Subject Tracking, cropped to 4604 pixels on the width, subject distance 37.9 metres

The OM-5 in Canada lists for $1,699. What does a photographer get for their money? They get a small, lightweight camera body that is IP53 rated. 7.5 steps of IBIS performance.  Live ND. Starry Sky AF. Live Composite. Focus Stacking. Focus Bracketing. Handheld Hi Res. Supersonic Wave Filter dust reduction. Fisheye compensation. Keystone compensation. Art filters. Pro Capture H/L. HDR auto composite and bracketing for HDR post processing… to name some of the OM-5’s capability.

So, the fundamental question is… if a photographer values all of those capabilities that are resident in the OM-5, what else can they buy that offers them all of those capabilities for less money? The answer is quite probably nothing.

Are their trade-offs for people who value all of those features and capabilities that are resident in the OM-5? Of course there are… and some of them are the items that some folks are moaning about in internet chat rooms.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 560 mm, efov 1120 mm, f/9, +0.3 EV, 1/2500, ISO-1250, cropped to 3373 pixels on the width, Bird Detection AI, Pro Capture L, subject distance 51.3 metres

I appreciate that some people will nitpick the list of OM-5 capabilities noted above, and downplay the importance of many of those features. That type of response clearly tells us something very simple and fundamental. That particular photographer is not part of the market segmentation that OMDS is targeting.

Technical Note:

Photographs were captured handheld using camera gear as noted in the EXIF data. Images were produced from RAW files or out-of-camera focus stacked jpeg images using my standard approach in post. This is the 1,225 article published on this website since its original inception in 2015.

OM-D E-M1X + M.Zuiko 100-400 mm f/5-6.3 IS with M.Zuiko MC-14 teleconverter @ 280 mm, efov 560 mm, f/8.4, 1/4000, ISO-1250, Pro Capture H, cropped to 3390 pixels on the height, subject distance 5.2 metres

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12 thoughts on “Conjoint Analysis”

  1. Far more in depth business analysis than I have ever thought of. Thank you for all the information. People may complain about not having the latest technology that is possible to have but than again would they pay the price for a all inclusive latest technological machine? If a manufacturer put all the high end technology in a offering, then what would they sell as better the next day? All this technology doesn’t appear overnight. As you said, manufacturers must make a profit and it must be consistent to stay in business.

  2. In the uk you will be lucky to find a BLX-1 battery for an OM-1 camera so maybe a quick rehash of a tired old product makes sense?
    I mean its out of date but at least you can supply the product and the dreadful battery that comes with it.
    I could not possibly buy an OM-1 in the UK because i cannot get a spare battery.
    I hope the company survives because i use the EM-1 mk iii and want to keep using the system despite the takeover but do not feel at all optimistic.

    1. Hi Stephen,

      Thanks for adding to the discussion. From what I can see the BLX-1 is backordered in a number of markets. My guess this is due to stronger than expected demand. We likely have a different assessment of OMDS. I am very optimistic about the future as I think OMDS is making a number of strategically sound decisions to get their fixed costs in line with the market size, as well as doing a much better job with their generic strategy and pursuing a Niche Differentiation approach.

      Tom

  3. Wholeheartedly agree. It’s obvious Olympus didn’t have wads of cash laying around to implement features just because they were asked. OM System is having to make deliberate choices about their product development as a smaller market share, and I think they’re making the right investments in technology versus wasting money on a new port… like come on, it’s a usb port. An extra battery is $11 on amazon and you don’t have to wait to use it. I recently switched over from fujifilm purely for weight and size reasons, and I’m loving it.

    1. Thanks for adding to the discussion Clay. We all have our preferences about camera gear and some features are more important to some people than others. Good to hear that you’re enjoying your Olympus/OM System gear.

      Tom

  4. I think Chris Niccolls (shoots Olympus primarily) from DPreview summarized the general feelings in his OM-5 video review. The experience of using the camera feels “dated” in which the previous camera also had same criticisms. This has been going on for years now and I think it is justified. Don’t get me wrong, the core hardware of the camera is darn good, even impressive for the asking price.

    As someone who loved their E-M5 and loves their E-M1II, I really fail to see how all this leads to their engineers and executives dropping the ball on these quality of life features.
    I like to focus on the USB issue.. What are the engineers and executives thoughts about Samsung’s A03s, the cheapest phone for the Canadian market at $169.99 using a USB C connector, but a mid range OM-5 at $1699.99 not? Are there more people wanting HDR composite over USB C which doesn’t care about what orientation you plug it in? This isn’t an Olympus exclusive problem either, and brushing it off as everyone having Micro USB cable in their drawer is plain lazy. If they’re trying to pivot to people who like to travel, the last thing I really want is to carry specific cables- I don’t miss the early 2000s shenanigans.

    Get with the times Olympus.

    1. Hi Moon,

      Everyone has their specific needs when it comes to cameras. So, you’ll need to make a value judgement whether having an older USB connection is a deal breaker for you when compared to all of the computational photography technology that is now in the OM-5, not to mention the improved weather sealing and 7.5 stops of IBIS performance.

      The cables that came with our E-M1X and E-M1 Mark III bodies are still in their original boxes as the only time I ever use them is for firmware updates. That simply makes us different. Cable connections are of concern to you… and I really couldn’t care less. C’est la vie.

      Tom

      1. Hi Thomas,

        Ah it’s a shame honestly because no one offers the almost complete package like Olympus does 😞. I’ll be waiting patiently when the OM-5 II has a more liveable user experience, or when the OM-1 used prices drop.

        I love my E-M1II since it addressed all the concerns from my original E-M5, but I miss the compact body a lot (and personally, I find it more stylish).

        1. Hi Moon,

          Sometimes equipment is a perfect fit and sometimes there are things that have a higher level of importance to us as individuals that cause some issues. In my experience buying a ‘compromise’ camera seldom works out.

          I agree with your ‘complete package’ assessment. I’m relatively new to Olympus and made my initial purchase in June 2019. After 3 1/2 years of pretty intensive use I love my Olympus gear even more than when I first got it. My E-M1X bodies are absolutely perfect for what I do… plus I have large hands and they are incredibly comfortable and ergonomic. This is really important when I’m out in the field for long days. I imagine I’ll be using my Olympus gear for many years to come.

          Maybe you’ll be able to pick up a good, used OM-1 in 2023.

          Tom

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