10 - Use of Conjoint Analysis in Litigation

Summary

Conjoint analysis is a commonly used methodology in marketing – it can provide crucial information for new product development,¹ product line extensions,² design of product packaging,³ pricing,⁴ and various other applications for which it is important to understand consumer preferences. Because conjoint analysis can help market researchers, managers, and ultimately anyone else answer the question of which attributes of a product impact consumer purchase decisions, and to what extent, the method has become more and more frequently applied in the realm of litigation cases.⁵ For example, in the legal domain, conjoint surveys can contribute to understanding and determining purchase reasons, consumer valuations, and potentially associated damages in matters with claims regarding product liability, false advertising, lack of disclosures, data/privacy breaches, infringement of intellectual property, and antitrust issues. Even though conjoint analysis seems to be a useful instrument when tackling certain legal challenges involving consumer purchase decision-making, courts have frequently rejected conjoint analyses from allowable evidence due to concerns regarding the validity or applicability of its results. The reasons for factfinders’ skepticism are manifold and range from lack of specific expertise to misapplications of the technique. While lack of expertise can be preempted through careful selection of a proficient expert, the process of conducting a reliable conjoint analysis presents hurdles and challenges to anyone: sometimes, conjoint analysis is simply an unsuitable methodology for the question at hand, and at other times intricate aspects of the survey design or sample selections are disregarded. In the same vein, experts have expressed on various occasions that the application of the conjoint methodology may run into conceptual problems such as ignoring supply-side factors when determining consumers’ loss for a specific product characteristic that may have been promised but was not provided. This chapter outlines common applications of conjoint analysis in litigation, describes the basic concepts and approaches in properly applying conjoint analysis, and points to misapplications of conjoint analysis in litigation matters. It will also make evident how conjoint survey design, data analysis, and use of results in litigation matters depend on the complexities of each case.