2002 Student Conference on Research and Development Proceedings, Shah Alam, Malaysla

SCORimWl

Consumer Preferences for Energy Efficient Room Air Conditioner in Malaysia: A Conjoint Approach
Tan Mong Hock Md Shah bin Majid and Hasimah Abd Rahman
Faculty o f Electrical Engineering University Technology ofMalaysia (UTM) 81310 Skudai, Johor, Malaysia

Abstrucl In order to ensure the success of energy efficiency standards and labeling program, a detailed consumer analysis of room air conditioner market should be Carried out. It is essential to know what factors influence preferences for room air conditioner, so that program can be devised to increase the market share for energy efficient room air conditioner. Previous researchers typically have used attitude . a i d opinionswveys to investigate consumers perceived importance of product attributes. However, these approaches do not require consumers to trade-off among different attributes. In this study, conjoint analysis was used to analyze consumers preferences for room air conditioners described by a set of 5 attributes, examining the relative importance as well as the trade-off among these attributes. Among all attributes, price is the most important factor in purchasing a roam air conditioner. However, different consumer groups attach different relative importance to these attributes was observed.. 1.

recovers and income level rise, more consumers will seek air conditioning. Since there is potential o o m of substantial energy saving in the domestic r air conditioning sector, the establishment of energy eaciency standard for room air conditioner has been given priority. In order to achieve the minimum efficiency standard, the manufacturers may have to m o d e their current designs. This may lead to changes in room air conditioners attributes such as price increment and energy saving. These o o m air conditioner purchases changes will affect r especially for lower income people. So, in order to ensure the success of energy efficiency standards and labeling program, a detailed consumer analysis of room air conditioner market should be carried out. The objective of this study is to determine which room air conditioner attributes consumers value most and estimate how changes in these attributes resulting from an efficiency standard may affect room air conditioner purchases and consumer utility. 2.

INTRODUCTION

METHODOLOGY

In early 1997, the Energy Research Group of Universiti Teknologi Malaysia initiated a research on the feasibility of standardizationand appliance labeling program in Malaysia. Currently, no regulation has been imposed on the manufacturer to produce an energy efficient appliance. However the govemment through the a s Supply Department of Electricity and G Malaysia has planned to enforce minimum energy performance standards (MEPS) for some domestic electric appliances. Appliance standards are a set of procedures and regulations which prescribe the energy performance of manufactured products, sometimes prohibiting the manufacture of products less energy eficient than the minimum standards.
Malaysia, like many other developing countries with hot and humid climates, has been experiencing dramatic growth in the number and use of room air conditioners. As the economy

Consumer decision making with respect to purchasing a product is a four stage process: need recognition; search for information; evaluation of alternatives; and choice. Methods to analyze consumer preferences can be classiiied in compositional and decompositional models. Among decompositional models, conjoint analysis has become an increasingly popular approach to estimate the benefits received from the attributes of a product.

Conjoint analysis inform the researcher about the structure of consumers preferences which are obtained from their overall judgement of a set of alternative products defined as a combination of levels of different attributes 111. Green and Krieger also pointed out the potential usefulness of conjoint analysis to estimate

0-7803-7565-3/02/$17.00 02002 IEEE.

282

product's market shares in alternative competitive scenarios [2]. The necessary data to carry out the conjoint analysis consist of consumers' evaluation of alternative product concepts described as a set of attribute levels [3]. Generally, the most common method of data collection (which is also used in this study) is the full profile method. Consumers are asked to score each alternative product concept taking into consideration their preferences. Research Design Generally, conjoint analysis can be described in five steps: (I) determination of the relevant attniutes; (2) determination of the relevant levels for each of the product attributes; (3) generation of product profiles and data collection. (4) the estimation method ( 5 ) the analysis of the results. Determination of the Attributes and Their Respective Levels product attributes are components or characteristics of the product. Conjoint analysis starts with the determination of relevant product attributes that are believed to influence a consumer's preferences (between different room air conditioners). The attributes should include those most relevant to potential consumers and those that can be influenced or manipulated by the manufacturer [4]. For the relevant attributes, levels must be assigned to them.'These levels must be plausible, actionable and capable of being traded & . After focus gmup discussion and consultation from the room air conditioner retailers, 5 attributes have been determined. The attributes' levels are as follows: (1) Price-RM1300, RM1500 andRM1700 (2) Energy savi+RMO, R M l O O and RM200 (3) Brand-National, Acson and York (4) Warranty yea-I, 2 and 3 ( 5 ) Quiet'operation-Yes, No
2.1.1

2.1

Conjoint, to reduce the number of profiles to 15, while at the same time maintaining orthogonality. The full profile approach is used as the means of presentation to the respondent. Under this approach, respondents are asked to rate the product profiles according to preference. Each profile defining a level of each of the 5 attributes. The rating scale is anchored from 0 to IO, with 0 being certainly would not purchase and 10 being certainly would purchase. The product profiles 127 respondent. were administered to Respondents were chosen at random in both Johor Bahru (60) and Ayer Tawar (67). Room Air Conditioner 1 Unit Price: RM 1500 Energy Saving: RM 100 Brand: Acson Warranty: 1 year Quiet operation: Yes
C h n l y would
would

CRtainly
PUIChaSe

Not purchase 0 1 2

IO

Fig. I . Example of a product profile

TABLE 1 Background Characteristic of Respondents Category (n=127) Gender Age Male Female
S30 31-50 250

Respondents %
58.2 41.8

'

34.8 52.3 12.9 29.4 54.1 16.5 11.2

Education 2.1.2 Data Generation of Product Profiles and Income Collection Having established the relevant attributes and their levels, hypothetical product profiles with different combinations of attributes are presented to individuals. This study give rise to 162 possible Clearly 2 ) . it would have combinations ( 3 x 3 ~ 3 ~ 3 ~ been unrealistic to ask individuals their preferences for so many scenarios. This study utilized a fractional factorial design, under SPSS

Primary PMR/SPM DipDegree

~~

<RM1000

RMlkJk
>RM3000

66.1
22.7

2.1.3

Estimation Method All 127 respondents provided a

interviewed

283

set of metric scores for the product profiles. Based on these scores, the conjoint analysis procedure calculates the contribution of each product attribute to the respondents preference. The contribution of the attribute level is termed as part-worth utility. For each respondent, the partworths were estimated using ordinary least square regression analysis. Conjoint uses the utility ranges to compute relative importance scores for each attribute.
3.
RESULTS AND DISCUSSION

a negative utility (U=-1.5444), while a price of RM1500 had a higher utility (U=-0,1966) and a price of RM1300 had the highest utility (u=1.7322). The utility of the price attribute shows that respondents in this survey were price conscious, deriving a higher utility from an aircon unit of a lower price.
3.1

Relative Importance of Attributes for Different Market Segments

Table 2 shows the part-worth utilities scores and relative importance for each level of each attribute. Respondents overall felt that price was the most important factor (35.42%) to consider in purchasing a room air conditioner. This finding was consistent with past research on consumer products[5]. Energy saving accounted for 23%, closely followed by brand (20.07%), warranty period (12.23%) and the least-valued attribute, quiet operation (9.28%). TABLE 2 Results of Conjoint Analysis (All respondents). Attributehvel
(%)

2 35
30

s
.-

p 20
15

25

m-*

z 2

lo
5 0
% I

s-na

BMd

%mny

cuvl

Fig.2 Comparison ofrelative importance (Age)

Utility

Relative

importance

Price
1. RM1300 2. RM1500 3. RM1700

35.42 1.7322 -0.1966 -1.5444 23.00

1 p-- b
40 35
Pnr.

Energy Saving I.RM0 -1.3222 2.RM100 0.4111 3.RM200 1.5667

s&na

Bmd

w-y

w..

Brand 1.National 2.Acson

3.YOrk

20.07 0.3333 0.0000 -0.3333 12.23 -0.6667 0.1445 0.7222 9.28

F i g 3 Comparison of relative importance (Educational level)

Warranty 1 . 1 year 2.2 years 3.3 years

Quiet operation ].Yes 0.7778 -0.7778 2. No

Within the attributes. the part-worth utilities of each level were also investigated. With regard to the price of the airzon unit, RM1700 had

mce

sr.q

d w-7

wd

Fig.4. Comparison ofrelative importance

(ICan.5)

284

As shown in figure 2, 3, and 4, it was determined that the relative importance of attributes vary across consumer groups. Older people put more emphasis on energy saving while younger people rely more on brand when purchasing a room air conditioner. On the other hand, respondents with higher educational level tend to purchase more energy eEcient air conditioner since they put more weight on energy saving than respondents with lower educational level. For respondents with lower income (<RMlOOO), price is the most important factor to consider when purchasing a room air conditioner.
4.
CONCLUSION

5. REFERENCES
[I] Green, P E and Srinivasan, V. (1978), Conjoint analysis in consumer research:: issues and outlook, Journal o f Consumer Research, Vo1.5, pp.103-23.

[Z] Green, P.E. and Krieger, A.M. (1991), Segmenting markets with conjoint analysis, Journal OfMarketing, Vo1.55, pp.20-31.
[3] Ness, M.R. and Gerhardy, H. (1994), Consumer preferences for quality and freshness attributes of eggs, British Food Journal, Vo1.96 No.3, pp.26-34. [4] Cattin, P. and Wittin, D.R. (1982), Commercial use of conjoint analysis: a survey, Journal ofhfarkeling, Vo1.46, Summer, pp. 44-53. Majon van der Pol and Mandy Ryan (1996), Using conjoint analysis to establish consumer preferences for fruit and vegetable$:, British Food Journal, Vo1.98 NOB, pp5-12.
[5]

The analysis results show that price is the most important attribute when consumers are purchasing a new room air conditioner. However, as stated earlier, the implementation of energy efficiency standard may lead to price increment. The higher price will discourage consumers from purchasing air conditioner, especially for the lower income people. On the other hand, it was found that different consumer groups attach different relative importance to a particular attribute. For example, consumer with higher educational level will tend to purchase more energy efficient room air conditioner.

285