3.2.2 Willingness to pay
The amount of money an individual is willing to sacrifice for a particular product, good or commodity signals their level of contentment thus referred to as willingness to pay. (McIntosh, Donaldson, & Ryan, 1999) shows that if a patient has expressed the ability to offset a given amount of money in return for treatment, then they do so in totality taking into consideration the diverse characteristics of the product they intend to purchase. This is a recent advancement in cost-effectiveness which has since been implemented in the health sector to establish the extent to which a patient is capable and as such signals that he or she can pay for the health product for as long as he or she will obtain maxim benefit.
As of 2011, 23 research studies had been in online print on willingness to pay particularly in the health sector (Lin, Michael, Lee, & Peter, 2013). Besides, the study by the latter authors submits that contingent valuation literature has fully grown promptly thus several patients places substantial worth on diagnostic info. This was evidenced in their study after analysis to understand the level of applicability of willingness to pay technique.
(Haefeli, Achim, McIntosh, Gray, & Atul, 2008) advises that surgery is cost beneficial. That is, the latter authors applied the use of willingness to pay in their study and as a result, realized that if the clients’ willingness to pay is assessed offering various categories (attributes) of surgery, then the final inference is that surgery is cost beneficial.
Research shows that cost benefit analysis pursues to sum up the significance of policy impacts. Besides,(Aidan & David, 2015) note that the only way to attach the monetary aspect to the impacts of the policy is through willingness to pay which is an advancement in a cost benefit analysis. A number of researchers have therefore applied conjoint analysis by indicating numerous preferences to help arrive at the willingness to pay among society members. This then has resulted to an understanding of the actual benefits of the policies compared to the current policies.
According to the literature, information on the product features influences willingness to pay. (Christoph, Michael, & Thomas, 2006) supports this particularly in regard to marketing management. Thus the willingness to pay enables product pricing and introduction of products to the market. Similarly, (Balderjahn, 2003) supports that willingness to pay is applicable in determining the market product price.
3.2.3 Conjoint Analysis
(Luce & Tukey, 1964) invented conjoint analysis in their practice of Mathematical Psychology. The same method was enhanced by the works of (Green & Rao, 1971) in marketing research in enhancing comprehension and forecasting of the traits a customer would elicit. It is noted that since then, this method has been applied and recently across various disciplines.
So as to elicit the willingness to pay, there comes the conjoint analysis. (McIntosh, Donaldson, & Ryan, 1999) shows that conjoint analysis allows comprehension of various features of a product so that economic aspect is captured as an attribute during the use of conjoint analysis. In other words, specified amounts of money are specified as features, and this enables the client to settle on what he/she is capable and willing to pay.
(Jan & Meyer, 2020) in their study in the public sector organizations utilized conjoint analysis in establishing how governments boost morale among its employees. They applied various characteristics which included education, year of appointment, wage and contract terms by taking a hypothetical situation of colleague comparisons. They concluded that the effect of personnel management practices varies across contexts. Adopting conjoint analysis was thus to this extent an empirical approach to the advancement in cost effectiveness procedure.
(Howlader, 2013) included the following qualities in their study during implementation of conjoint analysis in the healthcare in Bangladesh; determinants of premium, cost per doctor visit, physical examination, well baby visit and immunization among others. Their study demonstrated the aspect of conjoint analysis where the diverse product features offered to a client to settle on what really fits him/her thus eliciting willingness to pay and in the long run aiding in establishing the cost-effectiveness.
In instituting the applicability of conjoint technique in ranking the customer requirements, (Kotri, 2006), he concluded that conjoint method aid in optimal pricing and product development decisions. Hence it offers the company the opportunity to comprehend what values it guarantees its clients with a lot of correctness and clarity. He further suggests that the same technique promotes division of the market depending on the type of customer to enable smooth market operations.
Other studies suggests that use of conjoint analysis is a significant procedure in assessing the taste of patients. (Basem, Peter, & Angela, 2021) affirms the same in their study which embraced the use of panel data using a sample of 16 full literature reviews.
United Kingdom (UK) introduced a clause in its Health and Social care Act 2012, that all patients in the hospital should be part of their treatment pronouncements and this was a mandate to the UK National Health Services (Health and social care act; 2012). (Cunningham, Deal, & Rimas, 2008) acknowledged that conjoint analysis was utilized in providing the patients the choice to settle on their perceptions and ideals for healthiness actions.
A study in developed countries through secondary data reviewed showed that conjoint analysis preferably aids in understanding a patient’s perception in regard to services offered thus the results can be used in developing favourable facility policies to accommodate clients (Audrey, Sock, Xin, Su, & Sheamini, 2022).
(Wittink & Cattin, 1989) in their research work on the applicability of conjoint analysis among fifty nine surveyed companies revealed of the 1062 observations conducted, thirty eight percent was in line with assessing prices of items. This is affirmed in a comparable research work by(Wittink, Vries, & Burhenne, Results and Critical Reflections, 1994) in the European market where they realized that of the 956 observations, 46% were in regard to conjoint analysis.
Conjoint analysis enables a business enterprise to thrive in the competitive business environment by aiding the management team in methodically determining the relevant customers likes and dislikes (Simona & Gyula, 2012). Products are therefore produced with an objective of satisfying customers’ prerequisites.