Bachelor

Thesis Students:
BScB in International Business Frederik Hempel Jacobsen: 201305940
BScB General Jesper Muff Rytz Jrgensen: 201305939
Supervisor:
Athanasios Krystallis

Department of
Business Administration

02 May 2016
Character count:
125.945

Applying conjoint analysis to evaluate

consumer preferences














Abstract

Tesla is a relatively newly established manufacturer of electric vehicles that has

increased in popularity in Denmark in recent time. This study has examined Teslas
popular Model S through a consumer behaviour analysis with the purpose of identifying
key attributes and analyse their relative importance in a purchase decision.

The main study is a quantitative measure in a conjoint analysis and the attributes will be
derived through qualitative studies. Thus, the research design consisted of a sequential
mixed methodology with a study 1 and a study 2. The first study consists of qualitative
expert interviews and two focus groups. This is done in order to obtain knowledge of the
product through experts as well as identify the target group of the Model S. The findings
from the expert interviews served as a preliminary study to the two focus groups, which
main purpose was to unlock the key attributes of the Model S. The first focus group
consisted of current owners of a Model S and was included to get an insight into their
experiences with the car, in terms of both advantages and disadvantages. In addition, the
researchers conducted another focus group interview consisting of non-owners who has
a general interest and knowledge of cars. The interview provided an unbiased valuation
of which attributes a car of the same standard should have, as well as how they perceive
the Model S from their perspective of being enthusiastic about cars.

The two focus groups served as the key influencer in deriving attributes for the second
study, with the expert interviews serving as a secondary source, to compliment findings
from the focus groups. The participants were sampled through snowball sampling as
well as purposive sampling and resulted in three participants for both interviews. The
expert interviews were sampled by a judgemental sampling technique and consisted of
one product specialist in each interview.

The second study was a quantitative conjoint analysis followed by a cluster analysis. In
performing the conjoint analysis an orthogonal main effects plan was chosen as a
fractional factorial design. The orthogonal main plan resulted in 9 stimuli and 2 holdout

ii
samples. Potential consumers evaluated the 11 profiles through a survey distributed via
Facebook. However, before the actual survey was distributed a pilot study was
conducted to identify potential flaws and ways of improvements. The final survey
resulted in 134 useful responses.
The qualitative analysis yielded in 5 different attributes, derived through thematic
coding, which were used in evaluating consumer preferences towards the Model S. The
results from the conjoint analysis showed how the respondents valuated the different
stimuli as well as calculated their individual utility for each attribute. In addition, the
analysis yielded the predicted importance scores for each attribute, thus enabling the
researchers to evaluate the importance of the different attributes.
Of the 5 attributes it was calculated that Range was the most important factor
explaining 35,018% of the outcome in consumers decision-making. The second most
important attribute was Price with 29,203% and Acceleration being the third most
important attribute. Charging and Receiving updates was fourth and fifth
respectively. The individual utility scores were then subject to a cluster analysis in order
to see if any segmentation could be performed, which yielded mixed results due to
complications with the sample data. The cluster analysis had a secondary purpose in
further evaluating the results from the conjoint analysis.

The research successfully derived and calculated the key attributes that consumers use
to evaluate the Model S as well as how these attributes relative importance is
distributed between them. The results of the research will give an idea of what potential
consumers deem as being important in evaluating the product and how these attributes
can be used for further product development. The study further goes on to show, what
the consumers perceive as being necessary attributes and what is less important. Ideally
the study should have been able to use these findings for managerial implications such as
where added emphasis could be channelled for future products or for improvements of
the current product. However, due to limitations this could not be concluded based on
the study conducted, but the study provides a framework for how to provide enough
evidence for managerial implications.

iii
Table of contents

1. Introduction ........................................................................................................................ 1
1.1 Background & Case description .......................................................................................... 1
1.1.1 Tesla: ....................................................................................................................................................... 1
1.1.2 Tesla Model S ....................................................................................................................................... 2
1.1.3 Case description ................................................................................................................................. 3
1.2 The market of EVs .................................................................................................................. 3
1.3 Change in registration tax .................................................................................................... 4
1.4 Research objectives ................................................................................................................ 5
1.5 Delimitations ............................................................................................................................ 6
1.6 Previous research .................................................................................................................... 7

2. Research design ................................................................................................................. 8

3. Study 1 ................................................................................................................................ 10
3.1 Qualitative research ............................................................................................................. 10
3.2 Semi structured expert interviews .................................................................................. 11
3.3 Focus group interviewing ................................................................................................... 13
3.3.1 Conducting focus group interviews ........................................................................................ 14
3.3.2 Focus group 1 Tesla Owners .................................................................................................. 16
3.3.3 Focus group 2 Non-owners ..................................................................................................... 17
3.3.4 Analysis of qualitative interviews ............................................................................................ 17
3.3.5 Empirical results for the two focus groups .......................................................................... 20
3.3.6 Selection of attributes ................................................................................................................... 21
3.3.7 Implications of empirical results .............................................................................................. 23
3.3.8 Quality assessment of the qualitative study ........................................................................ 24
3.3.9 Validity and reliability of the qualitative study ................................................................. 25

4. Study 2 ................................................................................................................................ 27
4.1 Quantitative method ............................................................................................................ 27
4.1.1 Introduction to Conjoint analysis ............................................................................................ 27
4.1.2 Pilot study .......................................................................................................................................... 29
4.1.3 Instructional manipulation Checks ......................................................................................... 30
4.2 Data collection ........................................................................................................................ 31
4.3 Conducting the conjoint analysis ..................................................................................... 34
4.3.1 Constructing the profiles ............................................................................................................. 36

 4.3.2. The conjoint model ........................................................................................................................ 39
4.4 Empirical results conjoint analysis .............................................................................. 39
4.4.1 Predicted preference ..................................................................................................................... 41
4.5 Cluster analysis ...................................................................................................................... 45
4.5.1 Outliers ................................................................................................................................................ 46
4.5.2 Method ................................................................................................................................................. 46
4.5.3 Deciding on the number of clusters ........................................................................................ 47
4.5.3.1 Hierarchical clustering .......................................................................................................................... 47
4.5.3.2 K-means clustering ................................................................................................................................. 48
4.5.4 Cluster results ................................................................................................................................... 48
4.6 Discussion of quantitative study ...................................................................................... 50
4.7 Limitations ............................................................................................................................... 53
4.8 Validity & reliability ........................................................................................................................... 54

5. General Discussion and conclusion .......................................................................... 57

5.1 Discussion ................................................................................................................................ 57
5.2 Conclusion ................................................................................................................................ 59

6. References ......................................................................................................................... 62

1. Introduction

1.1 Background & Case description

Even though the concept of a fully electric vehicle (EV) has been around for
approximately 100 years, no producer has been able to produce an electric vehicle fully
capable of competing with a regular fossil fuelled car.
From the mid-1970s and ten years ahead, companies such as General motors, Audi and
Renault invested heavily in electric vehicles with the hope of being the first to introduce
and produce a fully functional, affordable electric car. However, everyone who tried, had
to realize that it was easier said than done (Khajepour, 2014). Since then, almost every
attempt made has, from a financial perspective, been rather unsuccessful.
These attempts have left the general electric car with an ambiguous reputation, a
reputation that a purchase of an electric car is a burden rather than a blessing.
However, in recent years there have been some progress, and the number of electric
vehicles worldwide has increased and is approaching 1.000.000 electric cars sold
(http://CleanTechnica.com, 2016).
In Denmark, Electric cars has until 1 January 2016 been exempted from the general
registration tax that regularly fuelled cars are subject to. This has resulted in the Danish
market experiencing a heavy growth in recent time, which however, has been slowed by
the phase in of the registration tax.
The main successor has in recent time been Tesla Motors; they have succeeded in
making a competitive car at a reasonable price relative to similar fossil fuelled cars. The
Tesla Model S P85D (the performance model), scored 103 points on a scale, which by
definition goes to 100 in, a test conducted by Consumer Reports
(http://ConsumerReports.com, 2015).

1.1.1 Tesla:
In 2003 a group of engineers in Silicon Valley, USA set out to create an electric car with
the purpose of proving that EVs could be as good, or even better, than fossil fuelled cars.
Tesla had a vision early on that they would create a fully electric vehicle with high
momentum and zero emission of greenhouse gasses. They had a declared goal to

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expedite the worlds transition towards sustainable transportation
(http://TeslaMotors.com, 2016a).

In 2008 they introduced the Tesla Roadster, a small sport car with an acceleration from 0
to 100 km/h in 3,9 seconds and a range of 392 km. This car raised the bar for what an
electric vehicle could do. However, the Roadster was merely meant as a concept car, a
mean of making the electric car appear sporty and sexy (http://www.caranddriver.com,
2008). However, Tesla soon after reached a new milestone in 2012 when they
introduced the Tesla Model S the first ever fully electric luxury sedan. In order to
improve the circumstances surrounding electric vehicles, Tesla has introduced their own
supercharging network, where Tesla cars can charge for free and at high speeds.
Designed for long-range travels, the superchargers will make it easier for Tesla owners
to travel longer distances (http://TeslaMotors.com, 2016b).

1.1.2 Tesla Model S

As briefly mentioned in the previous section, Teslas Model S is a fully electric car
developed in 2012, and has since then been Teslas best selling car, as it is their only car
produced on a larger scale. Since 2012, Tesla has sold more than 100.000 units of this
model worldwide1 (http://HybridCars.com, 2016).
The Model S is a customizable car where everything from the kind of speaker to the size
of the battery can be chosen. Tesla operates with three different battery-sizes; 70 kWh,
90 kWh and a 90 kWh performance with a range of 442, 550 and 505 km respectively,
with the performance model being the most expensive. The range is calculated in what is
called optimal conditions, and does not necessarily demonstrate the range under
normal conditions (http://TeslaMotors.com, 2016c). Apart from having a longer range
than the majority of electric cars, the Tesla Model S has also been called the safest car
in the world. This is mainly because the car does not have an engine, which allowed the
Tesla technicians to capitalize on the free space left by the engine, to design a large and
heavy battery installed as low as possible. This gives the car a low centre of gravity as

1 This number was extracted on 12 April 2016. And will therefore be higher on the

hand-in date.

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well as improving the rigidity of the chassis for improved protection of the passengers
(http://www.wired.com, 2013).
The price currently starts at around 700.000 DKK if the cheapest model, without any
extra equipment, is chosen. The most expensive model with everything in equipment
would cost around 1.700.000 DKK with the current level of registration tax.
The Tesla Model S has won numerous awards, including Automobiles Car of the year,
Euro NCAPs Safest car of the year and Consumer reports Best car ever tested
(http://www.cnbc.com, 2015)

1.1.3 Case description

In a very competitive market it is important to maintain a competitive edge in the market
by, for instance, having knowledge of consumer behaviour, by knowing which attributes
drives potential customers toward a purchase of a product. Knowing which attributes
are the most important, the company will be able to focus its attention towards these
attributes by either refining the current product in newer editions or by paying more
attention to these factors for future models.
Teslas Model S is an expensive car and will only become more expensive by the increase
in taxes. By knowing which attributes are the most important or which are the least
significant attributes, Tesla will be able to create future models with consumer
preferences in mind. The objective of this research is thus to develop a study, which will
identify key attributes for a Model S and highlighting which factors any potential
customers regard as important and which are less important.

1.2 The market of EVs

The market for electric vehicles in Denmark has in the last year experienced a rapid
growth relative to previous years. The number of registered electric vehicles rose with
more than 280% from 2014 to 2015, with 1.575 total sales in 2014 and 4.523 electric
vehicles sold in 2015. Teslas Model S accounts for 60,5% of the total increase, with 2.736
cars sold during 2015 (http://DanskBilAlliance.dk, 2016). The increase in sales of EVs,
and especially the Model S, should be seen in the light of news breaking in October, that
EVs would be subject to taxes, in that 1.773 of the total 2.736 for the year was sold in the
last two months of 2015. The taxation thus increased the incentive for consumers to

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purchase their electric vehicle in late 2015 rather than in the early 2016. This was
according to Rasmus Bruhn-Hansen, who is a product specialist at the Tesla office in
Aarhus, predictable: Now, the price has gone up with 150.000 DKK, meaning that a lot of
those people, who bought a Tesla instead of a Passat, cant afford it anymore (Appendix
1).
An illustration of the growth in sales in the total number of newly recorded electric
vehicles in Denmark can be seen in figure 1. The numbers do not take the sale of second
hand electric cars into account.

Number of electric cars sold

5.000
4.500
4.000
# of EV's sold

3.500
3.000
2.500 # of electric cars
sold
2.000
1.500
1.000
500
-
2011 2012 2013 2014 2015
Year
Figure 1 Graph for electric cars sold (http://DanskBilAlliance.dk, 2016)

On a global scale, major car dealers such as Volvo, Nissan and Renault have already started
investing in electric vehicles, as they believe electric cars represent the future of
automotive transportation (http://eandt.theiet.org, 2016). Volvo, for instance, predict that
in 2019, 10% of their total global car sale will come from electrified cars
(http://fortune.com, 2015).

1.3 Change in registration tax

In autumn 2015, after several months of negotiations in the government and speculations
in the press, it was agreed that electric vehicles would be subject to taxes by the beginning
of 2016. The initial proposal from the government came in October 2015
(http://borsen.dk, 2015), and suggested a gradual increase in taxes over a five-year period,

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 however, cars exceeding 800.000 DKK would be subject to maximum taxes equal to those
of fossil fuelled cars. The proposal was, however, forced by the European Commission of
Competition to be amended as it was deemed anti-competitive (Skatteministeriet, 2015).
As a result the government proposed a revised legislature without a ceiling for full taxes.
The final draft came in late 2015, and with the approval of the European Commission
(Skattemenisteriet, 2015), it was signed in December 2015 (http://www.skat.dk, 2015).
The change in the registration tax implies a five-year phase-in period, where the
registration tax gradually increases until it reaches the level equivalent to vehicles with a
Diesel/Petrol engine in Denmark. The first phase was initiated in January of 2016, where
the registration tax for electric vehicles increased from 0% to 20% of the total taxes that
fossil fuelled cars are subject to.

1.4 Research objectives

Tesla is becoming increasingly popular around the world with their successful all-
electric Model S (http://bgr.com, 2016). However, in a very competitive market where
the vast majority of cars are fossil fuelled and few EVs exists, the introduction of an all-
electric car from a new and inexperienced car manufacturer has been met with both a
high degree of scepticism and enthusiasm. Tesla has however experienced success in the
Danish market relative to other EVs and has been an important driver in the total
growth of Electric Vehicles in the Danish market. Therefore it seems relevant to examine
what the decisive attributes and drivers are for the future success of Tesla. This leads to
the following research question:

What characterises potential customers preferences towards a Tesla Model S?

In order to answer the above research question the following sub questions will be
examined:

o What are the key attributes in evaluating the Model S?
o How does these attributes drive potential customers preference towards
a potential purchase?

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The purpose of the paper is to identify and elaborate on the most important attributes.
Tesla could from a managerial perspective, use this elaboration for future product
development, as they would have a better knowledge of where to focus their resources.

1.5 Delimitations
The study approaches the Danish market for electric vehicles and more specifically the
Tesla Model S. The Danish market has been chosen, as there does not seem to exist any
studies conducted in Denmark depicting the salient attributes of a Tesla Model S as well
as the limitations to conduct the study on any other market. This will be elaborated in
the Previous research-section. There will be made no direct connections to other
countries, as there can be differences in preferences, trends etc. that could influence the
outcome of the study.
The study will make no attempt to explain any external factors and how they might
influence the purchase intention. A short outline of the registration tax that is being
phased in has been made, but the direct and indirect implications that it has and will
have, will not be discussed.
The quantitative part of the study will not attempt to investigate any rebuys (straight
rebuy, modified rebuy etc.), as the focus of the research will solely be on people who do
not already own a Tesla. This is due to the relative difference in knowledge among
respondents, which would make interpretations difficult. People who currently own a
Tesla Model S would be biased in the sense that this study will try and illuminate
potential customers perceptions of the car.
Furthermore, the study will only examine people who are car owners, such that non-car-
owners will be excluded. As an addition to this, there will not be made direct age-
restriction to the quantitative part of the study, as this would limit the potential sample
size substantially.
The research is conducted completely independent from Tesla Motors, implying that
they have not contributed with anything apart from participating in qualitative
interviews.

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1.6 Previous research
The field of automotive transportation has been greatly researched throughout the years, with
several studies, which have been conducted to determine everything from the actual CO2
emissions of electric cars to the individual attributes of regularly fuelled cars. (Wu et al., 2014,
Van Vliet et al., 2011).
In this section though, the focus will be on electric cars and their attributes, implying that
regularly fuelled cars as well as natural science will be of secondary importance.
Rezvani et al. (2015) provided an outline of the drivers for and barriers against, consumers
adaptation of electric vehicles in the modern world.
Another study was carried out by Heffner et al. (2007). They researched how symbolic meanings
behind purchasing either a hybrid car or a fully electric vehicle was perceived in California. This
method needed to be done on a qualitative basis, and concluded that not only can electric cars
provide the owner with transportation; it can also assist the owner in telling his/her
surroundings better stories about them selves.
The price that consumers would be willing to pay for an electric car has also been researched. In
a study it was concluded that the price range for consumers, closely matches the price range of
conventional cars (Larson et al., 2014). The study further concluded, that the consumers were
unwilling to pay a large premium to purchase an electric car.
Another study forecasted sales of electric and hybrid cars with a choice-based conjoint analysis,
the attributes chosen in this study was among others fuel price, battery replacement cost and
appearance (Eggers and Eggers, 2011).

All the above-mentioned studies have been carried out in a different country than Denmark;
therefor a study depicting the Danish market seems appropriate. Furthermore, the studies focus
mainly on different attributes or factors of the topic and there has been no research conducted,
known to the researchers, which examines the main drivers in purchasing a Tesla Model S in the
Danish market. This further underlines the incentive for a study of this nature.

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2. Research design
A research design is, in all its simplicity, the logical sequence that connects the empirical
data to a studys initial research questions and, ultimately, to its conclusion (Yin, 2013,
p. 28). Such is the brief introduction presented by (Yin, 2013) with a further notice that,
implicitly or explicitly, every empirical research study has a research design. A research
design is thus a map for getting from the initial research questions to an understanding
of the phenomena, answers to the research question or another type of conclusion.
Within that map may lay a number of different steps, for example the collection of data
and corresponding data analysis. The main purpose of a research design is to avoid any
situation in which the evidence/data does not address a research question (Yin, 2013)

There are two primary research methodologies; qualitative and quantitative research
methods (Malhotra and Birks, 2007). These two approaches represents two very
different methods in doing research and obtaining data, and thus typically divide
researchers into either one method. However, both methodologies carries strengths and
weaknesses in relation to marketing research, and as a result, focusing on one particular
methodology can be futile (Malhotra and Birks, 2007). There are circumstances, in which
qualitative research can explain a phenomenon through intensive field observation or
interviewing, that are not quantifiable. On the contrary, there are circumstances, in
which quantitative research can explain a phenomenon through experimental or
descriptive techniques that qualitative research would not be able to carry out.

This paper will apply a research design that consists of a combination of the two
methods. In a mixed method study, the researcher combines or mixes both quantitative
and qualitative designs into one single study (Tashakkori et al., 2015). Using both
methods in the same study forces the methods to be mixed into an integrated mode,
which differs from the conventional methodology of using quantitative and qualitative
method separate of each other and in separate studies. As a result, mixed method as a
research design can enable the researcher to collect a richer and stronger array of
evidence and thus address more complicated research questions.

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The methodology originated in the 1980s as a reaction towards the two dictating and
opposing methodologies quantitative and qualitative research. When the methodology
appeared in the 80s it created 3 clusters of beliefs in relation to mixed methodology. The
multidimensional continuum orientation considers the research design as a combination
of qualitative and quantitative research, with one being the core and the other the
subsidiary methodology of the research. The two methods are complementing one
another in answering the research questions.
The second orientation conceptualizes the mixed method as a dynamic interaction
between the two different approaches, meaning qualitative and quantitative coexists in
the research design, as opposed to being sequential. Lastly, the third cluster of beliefs
finds the methodology as somewhat irrelevant and sees qualitative and quantitative as
either two discrete categories or as poles of a continuum (Tashakkori et al., 2015).
This paper has applied, as mentioned, a sequential mixed method design, where a
subsidiary qualitative approach complements the core research of the design, the
quantitative approach, thus opting for a multidimensional continuum orientation. The
qualitative findings will thus serve as a basis for the quantitative analysis.

Qualitative research Quantitative research

Expert
intervies
Research Conjoint Cluster Conclusion
question Survey analysis analysis
Focus group
interviews

Figure 2 Process of applied sequential mixed methodology

This study is conducting a consumer behaviour analysis on the key attributes of a Tesla
Model S. The reasoning behind opting for a mixed methodology is the prospect of
collecting data from different perspectives, and thus provides a deeper and wider
understanding of the case. As a result two studies, embedded in one overall sequential
mixed method design will be carried out. Through a sequential mixed method design,
this study will be able to account for different perspectives when conducting the final

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analysis of the Tesla Model S different attributes and ultimately perform the conjoint
analysis successfully.

Figure 2 outlines the overall process of the sequential mixed method research design.
Firstly, qualitative interviews will be conducted to obtain knowledge and uncover
potential key attributes and features of the Tesla Model S and the company behind. The
initial qualitative interviews will be of an exploratory nature, which will lead to the
establishment of further qualitative research. Secondly, two focus group interviews will
be conducted with each of them serving their own individual purpose. The focus group
interviews will be the basis for the quantitative part of the study. The quantitative study,
which will be explained in detail later, consists of a conjoint analysis as well a cluster
analysis, which ultimately will result in an overall conclusion for the entire study.

3. Study 1
This section will evaluate the qualitative research conducted in the study. It includes an
assessment of the theory applied, the application of the theory and implications of the
qualitative section to the final outcome of the study. Finally, a discussion of validity as
well as reliability will be made.

3.1 Qualitative research

In qualitative research, interviewing is a very common form of data collection and is
used to gain a greater insight or understanding of a phenomenon (Rowley, 2012) . The
researcher usually wants rich and detailed answers and by using either field
observations or interviews as a method of data collection, the researcher can achieve
suitable insights into the participants or interviewees point of view (Bryman and Bell,
2011). It is often used in research when the researcher has limited understanding of a
phenomenon, and thus applies an explorative qualitative methodology and flexibility due
to the unstructured complexity of the problems (Eriksson and Kovalainen, 2008). As a
result, qualitative research is often used as a preface to a quantitative phase in mixed
methodology (Silverman, 2006).

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A qualitative study is great for understanding a phenomena, but cannot be applied to
large samples and as a result cannot be used to infer much about a larger population
(Silverman, 2006). The qualitative process is lengthy and time consuming, as the
researcher depends on people to take time to talk the researcher. Then there is the
transcription of data and the data analysis, which in addition is a lengthy process.
However, the advantage of the complexity of the study is that the research will be able to
extract information from for instance experts, which would not have surfaced if not for a
qualitative interview. This is in direct contrast to quantitative study, where data
collection is less time consuming and much more structured in order to obtain high
reliability and (Eriksson and Kovalainen, 2008). Furthermore, the quantitative research
has a clear set of research questions that are to be examined. In the qualitative research,
the research questions are usually changed/revised several times during the research
process, due to new information surfacing (Eriksson and Kovalainen, 2008).

In qualitative research, interviewing is an integral part of the process of obtaining data,
with different structures of interviews ranging from structured to unstructured. The
structured interview leaves little room for interpretation and unpredictability. Questions
are usually very precise and answers are alike, with usually short answers and many
questions. At the other end of the spectrum, is the unstructured interview. With this kind
of structure, the interviewer is limited to a few guiding and open questions in order to
guide the interviewee to talk around a theme, rather than answer specific questions. In
between is the most commonly used structure, the semi-structured interview, which
carries a certain degree of structure while still leave room for the interviewee to go off
topic (Rowley, 2012)

3.2 Semi structured expert interviews

The first part of the research design consists of two expert interviews, which had the
purpose of collecting as much insight to the market and the car as possible. Both
interviews were conducted using a semi-structured approach that allowed the
researchers to ask follow-up questions if something was deemed inadequate and
therefore needed further elaboration.

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The semi-structured interview is a useful tool in studies where there is little knowledge
about the subject and when the research objective is to understand experiences,
opinions, attitudes and values (Rowley, 2012). The line of questions is intended to be
open-ended with the purpose of providing the researchers with as much information as
possible (Gill et al., 2008).

In order to find suitable candidates for the expert interviews, a form of non-probability
sampling called judgmental sampling was applied (Bryman and Bell, 2011). A decision
to target Tesla offices in Denmark were made, and the sampling were done primarily
from a perspective of limited choices as Tesla only has three sales offices in Denmark.
The first office with a positive response was the Tesla office in Aarhus and not long after
that the office in Copenhagen made themselves available. Both offices was deemed
appropriate to the task at hand, since this would allow access to so-called product
specialist, who was assumed to have great insight the both the product as well as the
market.

The first interview was conducted in Aarhus with a product specialist from the local
office. His job was to know everything about the product as well as serve as a sales
person on a daily basis. He was therefore considered appropriate to provide the
researchers with the knowledge needed to proceed to the next step. The duration of the
interview was roughly 30 minutes (appendix 1)
After the first interview, the interview guide were assessed and slightly modified before
the second interview. The modification mostly consisted of assessing the way questions
were asked, but also adding questions to gain further insights. The second interview took
place in Copenhagen with a second product specialist and lasted again roughly 30
minutes (Appendix 2).

The main purpose of the two expert interviews was to examine, what the product
specialists considered as being important attributes to the car and to identify consumer
segments. Furthermore, the researchers had an objective to uncover the product
specialists view of the price sensitivity of the consumers, as well as the impact of the

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new registration tax on the market. Apart from this, an attempt was made to determine
the influence of the services and charging possibilities offered by Tesla with regards to
the Model S.
After both interviews were conducted they were subject to a coding process consisting of
a transcript and first level coding. The length of both interviews and the pre-structured
interview guide justified the relative simple coding process. The outcome of the analysis
of the two interviews was used as a foundation of the upcoming focus group interviews.

3.3 Focus group interviewing

A focus group is a group of individuals selected and assembled by researchers to discuss
and comment on, from personal experience, the topic that is the subject of the research
(Powell and Single, 1996, p 499). Focus groups, as a research technique, uses the
discussions in the interview process, as a mean of generating details of an individuals
reasoning behind actions, beliefs, perception and attitudes (Powell and Single, 1996).
A focus group generally consists of a group of people of two to ten participants and a
facilitator (Eriksson and Kovalainen, 2008). The facilitator guides the participants
through the discussion and interactions between the people involved. Typically a focus
group takes place in informal surroundings in order to encourage people to express and
share their viewpoints and eliminate potential constraints participants might have in
this matter (Eriksson and Kovalainen, 2008). The participants of a focus group should be
strangers to each other and to the facilitator in order for the participants to feel
anonymous. This anonymity stimulates an atmosphere that encourages honest opinions
on the subject at hand and limits the possibility of participants being afraid or too shy to
air their personal viewpoints (Powell and Single, 1996). In addition to the anonymity of
the participants, there is another important aspect to the group dynamism that cannot be
achieved through in-depth interviews, which is the interaction between participants. The
nature of the focus group allows participants to elaborate on their own inputs to the
discussion through stimuli from other participants points of view and thus expanding
their own viewpoints on the discussion at hand (Powell and Single, 1996).

However, although focus groups can be very useful and resourceful there are several
limitations to the method that should not be ignored. Firstly, participants tend to try to

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appear overly intellectual and there can be a tendency for the participants to portray
themselves as thoughtful, rational and reflective individuals (Krueger and Casey, 2014).
There is furthermore the prospect of the group-effect having a negative impact on the
participants, especially if there are one or two very dominant participants undermining
others opinions, and thus a dominant individual can influence the results (Krueger and
Casey, 2014). In addition, group dynamics can have the effect of encouraging an
irrational statement causing the participants to think uncritically about a certain
viewpoint and develop unlikely attachments to it (Janis, 1973). Lastly, it should be
mentioned that interviewer bias could have consequences for the outcome of the
interview, as Morgan (1996) argues, in saying that there is no denying that the
behaviour of the moderator has consequences for the nature of the group
interviews(Morgan, 1996, p. 140).

3.3.1 Conducting focus group interviews

To ensure that the data obtained are of the desired quality, a basic goal of the research
design, for a focus group, is to ensure that the research-procedures will deliver the
desired data (Morgan, 1996). The quality of the data depends on a number of factors,
such as having enough participants, ask the relevant questions, the quality of the
moderator and that the correct analysis is applied (Morgan, 1996).

The preliminary planning process is also very important in ensuring high-quality data. In
the planning process, the number of participants and the sampling of these participants
are of great importance for the quality of the data. According to Krueger and Casey
(2014) it is a good idea to conduct three or four focus groups, or at least until no new
data is generated. If after four interviews new viewpoints/reflections surface, a fifth
interview might be feasible, which they refer to as redundancy or theoretical saturation,
hence the researcher continuous interviewing till no further information can be
obtained.

Another very important part of a good focus group interview, is the recruiting of
participants, which can be very time consuming and a difficult task (Eriksson and
Kovalainen, 2008). There are several ways of doing this. One way is the snowball

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technique, where the researchers locate one or more individuals, who could be
interested in participating and who knows others in the target group. These individuals
can thus get others to participate, or at least initiate a contact between other potential
participants and the researchers (Eriksson and Kovalainen, 2008).

According to (Krueger and Casey, 2014), a real challenge in recruiting participants for
the interview, is to get people who are not interested in the study. If people have an
interest in the study, the results may be biased. Furthermore, they argue that the
researcher should do three things in order to be successful. Firstly, one should find a
pool of participants and secondly a good recruitment procedure should be developed.
Lastly, the researcher should create incentives for the participants in order to increase
attendance.

This paper has used different methods of recruitment for each of the two focus groups.
For the first focus group a purposive sampling method (Miles and Huberman, 1994) was
applied where participants were selected based on their knowledge to the Model S based
on their own experiences. Purposive sampling is a method, where the researcher selects
participants based on the aims of the research as well as the expected contribution of the
participants (Miles and Huberman, 1994). This sampling method was used to find
participants through a Tesla Owners Facebook page and location recruiting (Krueger &
Casey, 2001), where potential participants were approached at a designated Tesla
charging station. For the location recruitment, the researchers positioned themselves at
the local supercharging station and presented owners with a small introduction as well
as a letter of invitation to the focus group, with a small description, contacts and address.
The recruiting yielded in one participant, and some non-recorded conversations about
Tesla in general. These conversations helped enlighten the researchers with a further
and more extensive knowledge about the supercharging system as well as miscellaneous
features of the Tesla Model S.

For the second interview a snowball sampling was applied, as there were no obvious
Facebook groups for car enthusiast in the desired segment and a location for obvious

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potential recruits was difficult to find. Thus, a known car enthusiast was contacted and
he then, contacted others to participate. Usually a snowball sample would rely on more
than one representative to recruit other participants, within the selection criteria, and
then pool those found (Krueger & Casey, 2001). However, due to time limitations as well
as a limited network, the researchers had to rely on a single participant to find others
who would be interested in facilitating. This will be further assessed in the section on
validity and reliability.

3.3.2 Focus group 1 Tesla Owners

The first focus group interview served multiple purposes; first of all it was used as a tool
to elaborate and confirm the findings from the two expert interviews. Secondly, the
findings of the focus group were used as a mean of constructing attributes for the
quantitative study.
In addition, the focus group was intended to provide the research paper with a higher
degree of internal validity through the participants personal reflections on their usage of
the product and their personal experiences gained from owning the Model S.

The interview was conducted on Saturday the 5th of Marts at 14.00 and lasted roughly 60
minutes. The setting was at home of one of the researchers parents in order to create an
informal and relaxed atmosphere. There was no one else home in order to avoid any
interruptions. The interview was moderated by one of the researchers and assisted by
the other. In the beginning of the interview, a small introduction to the study was given
and members were given an opportunity to introduce themselves. In the introduction,
the participants were informed about relevant formalities as well as a confirmation of
their anonymity.
When eventually the introduction, small talk and formalities were done, the facilitator
took charge and began the interview with some general questions regarding their
purchase of the car. The entire interview transcript can be seen in Appendix 3 and the
interview guide can be found in Appendix 6.

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3.3.3 Focus group 2 Non-owners
The second focus group was conducted with three participants who do not own a Tesla
Model S, instead they considered themselves to be car enthusiasts which was the
condition the researchers was looking for. The purpose of this focus group was to obtain
an unbiased view of the purchase of a quality car. The three participants where selected
to be representatives of the desired participants in the quantitative study. Another
objective of the focus group was to increase the internal validity, as they would provide
another angle than the one owners of a Tesla Model S could provide.

The focus group interview took place at one of the participants home on the 10th of
October at 8 pm. The venue was chosen on request from one of the participants, which
gave the researchers less control over the environment, but ensured that the members
were in familiar surroundings. The interview lasted roughly one hour, with a bit of small
talk at the end. The researchers had developed a new interview guide for this interview,
but the approach was the same, with a small introduction to the study and of the two
researchers as well as the participants. Once again one researcher had the role of being
the moderator with the other assisting in controlling that all questions in the interview
guide was answered adequately. The division of moderator and assistant was the same
as with the first focus group.

3.3.4 Analysis of qualitative interviews

For the analysis of the results from the focus groups, thematic coding was applied, which is a
form of qualitative research mainly used as a tool to identify patterns in qualitative data.
According to Braun and Clarke (2006), thematic coding should be seen as a foundational method
for analysing qualitative data. There is however no clear universal agreement as to how the
analysis should be conducted (Braun and Clarke, 2006, Attride-Stirling, 2001). In many cases the
analysis is confused with a discourse analysis, which also is concerned with analysing the spoken
word, and the impact it has on the context in which it operates. In other contexts the method is
not identified as a method at all (Bryman and Bell, 2011).
Like discourse analysis, thematic coding occasionally suffers from being limited in its direct
applicability because of the anything goes principle, and is therefore in some cases limited in
its transferability to other theories as well as the direct use in some analytical contexts (Braun

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and Clarke, 2006). However, this limitation also helps the overall flexibility of the framework,
implying that the framework in many instances can be applied to almost any type of analytical
framework (Braun and Clarke, 2006). This flexibility helps justifying the use of thematic coding
in connection with the qualitative interviews, which is a preliminary study for both the conjoint
analysis as well as the following clustering procedure.

Thematic coding will in this instance be conducted using the framework presented by Braun and
Clarke (2006), where a six-step method is outlined. The six steps explained are the following:

Familiarising yourself with the data
Generating initial codes
Searching for themes
Reviewing themes
Defining and naming themes
Producing the report

It should be noted that the last step, Producing the report, will not be applied in this case, as the
coding is used as the groundwork for conducting further investigation of the topic at hand.

The purpose of the analysis is to find key themes from the interviews, which can be used
in the conjoint analysis. Thus, thematic coding was applied in order to analyse the data
gained from the four qualitative interviews.

The first interviews served two purposes. Firstly, the thematic coding of the interviews
were used in identifying themes for the focus group discussion as well as try and help
locate potential candidates. Secondly, the analysis was used in identifying the key
attributes for the final conjoint study, although more emphasis was put on the analysis of
the focus groups role in unlocking attributes for the final study.

In addition, the paper has accounted for attributes, which was implied in the purchase of
a Model S, and thus would not be applicable for the conjoint analysis. An example of such

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an attribute would be environmentally friendly, which is a selling point derived from the
expert interviews. However, as significant as it might be in the purchasing decision, it is
so deeply implied in the production of the car and the in the car itself, that it was not
accounted for as being an attribute, which potential customers could have any effect on
for future models.

In the process of conducting the thematic coding, Braun and Clarke (2006) describes
four different steps in generating themes from your data. An example of the process is
shown in figure 3. However, the model only illustrates step 2 and 3 in Braun and Clarkes
(2006) guide for thematic coding, as step one and four is non-illustrative. Step 1 of the
analysing process is to familiarise yourself with the data. This was done through
transcription of the audio files and a final reading of the transcript. The second step, as
illustrated in figure 3, is reading through the data for codes. As an example of one such
code, one of the participants answer to which concerns he might have towards an EV,
can be highlighted: I can just imagine being stranded somewhere in the middle of
nowhere with an empty battery (Appendix 4). This statement gives an indication of a
concern for battery charging possibilities and the range of the battery. In this step the
entire data set was coded, without any theoretical filter as the researchers wanted to
capture all potential codes. In step 3, the codes were organised into different themes, as
illustrated in figure 3. Here, an example of three different codes were organised into one
theme. For this step, a more theoretical approach (Braun and Clarke, 2006) was applied,
implying that the thematic coding was done, with the conjoint analysis in mind.
Implications of this approach were, that the codes that would have no influence on the
conjoint design, were left in a miscellaneous category, such as environmentally oriented
codes, as also described earlier in this section of the paper.
The fourth and final step of the analysis involves a refinement of the themes found in
step 3. Initial themes found in step 3 is revised, with some being eliminated, some will be
merged and others change to suit a potential design for the conjoint analysis.

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 Henrik: When asked about,
what concerns he has to an
electric car, his answer was: "I
can just imagine being stranded
somewhere in the middle of
nowhere with an empty
battery"

As a salesargument, Theme:
Mikkel said: "The Battery/
range on a Model S is Range
deoinitely a salespoint"

Rasmus: "We have a lot

who are sceptic. It is
primarily towards the
battery, that is, the range
of the battery"

Figure 3 - Example of thematic coding

3.3.5 Empirical results for the two focus groups

The analysis resulted in four groups of themes, one for each of the focus group
interviews and two for the expert interviews. The process of the analysis and all codes
within each theme is outlined in Appendix 9-12.
The empirical results of the qualitative research are shown in table 1 below.
Table 1 - overview of codes

Expert Interview in Aarhus Expert Interview in Copenhagen

Performance (engine Performance (engine
power/acceleration) power/acceleration)
Consumers Consumers
Charging possibilities Charging possibilities
Environmental Uniqueness of the car
Technology Technology
Price and the taxation Price and the taxation
Marketing Marketing
Design Post purchase economy
Concerns/skeptics Safety

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 Focus group 1 Tesla owners Focus group 2 non-Tesla owners

Driving experience Performance/Acceleration
Purchase decision Gear
Technology Economy
Image of having an EV Design and image
Post purchase economy Equipment
Price Safety
Taxation Environment
Battery/Range Concerns of having an EV
Long distance driving
Charging/price for charging
Norways market for EVs
Design
Environment
Challenges of having an EV

The two focus group discussions produced different outcomes and yielded different
themes. This was expected, as the overall aim and the line of topics was significantly
different between the two. When looking at the themes emerging from the two focus
groups, it should be noted that the themes from the first focus group (The group
consisting of Tesla owners) resulted in more complex and nuanced themes than the non-
owners focus group, which kept the answers to a more general level.

When looking at the results from the two expert interviews, where the questions and
answers were very similar, the themes that emerged were somewhat the same only with
minor variations. As table 1 illustrates, there was a lot of themes throughout all four
interviews, and as a result, not all themes will be mentioned further.

3.3.6 Selection of attributes

The conjoint analysis following the qualitative study will be based on the findings from
the thematic coding. The conjoint analysis will consequently evolve around a set of
attributes that emerged from a combination of the four qualitative interviews. From a
theoretical standpoint, attributes should be selected according to their significance in
gaining consumer preferences. In addition, they should also have managerial
implications, meaning that the attributes chosen should be salient for the management.
Thus, the attributes and levels should be of a character that management has the

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possibility of altering with and take action upon (Malhotra and Birks, 2007). The
attributes were furthermore selected with both a rational and logical perspective of what
was deemed important in the conjoint analysis. The attributes will be presented below
followed by a brief outline of the process of the selection of these attributes.
- Acceleration
- Charging possibilities
- Range
- Receiving updates
- Price
When talking about purchase decisions both Ivan and Helge from the tesla owners
focus group talked about the acceleration and power of the engine, with Helge stating
that There is a rapid acceleration and Ivan saying that I was completely sold, when the
car dealer told me, that you can always make the yellow light in a Tesla, and I floored the
accelerator (appendix 3). This was also a theme in the non-owners focus group, as being
a point of importance for a car of that stature, with all agreeing on, that a car has to be
fun, and that they emphasises the engine, when evaluating a new car.

Furthermore, it is noticeable how much talk went into the infrastructure of charging-
stations in the first focus group. This was also a big concern and a actual limitation to the
non-owners focus group, with Henrik saying that he could just imagine himself, being
stranded in the middle of nowhere with an empty battery. However, this statement was
not a logical one, according the Tesla owners, with Hans, a Tesla owner, saying that it is
more difficult to run empty in a fossil fuelled car than in an EV (Appendix 3).

Also, the range was a theme in both discussions, with the non-owners stating it as an
obvious concern on their part. The Tesla owners did not state it as a concern, more a
minor workaround in their driving habits. It was not until you had to travel far, across
Europe, that it would become noticeable to them. But that also caused a smaller
discussion in that group.

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A theme, which both experts and the Tesla owners were enthusiastic about and deemed
important to their purchase decision was the technology in the car, and especially the
function that enables Tesla to update the Model S over the Internet, just like a
smartphone. This however, was not something the non-owners saw as a decisive
attribute to their purchase decision. They were able to acknowledge the advantages of a
technological car, but did not see it as a decisive factor.

The price was also discussed in all four interviews, primarily on the basis of the new
legislation towards EVs. From the first focus group it was evident, that all participants,
perhaps except Ivan, would pay almost double of what they paid for their Model S, if
they had that amount of money for a car. The non-owners were sceptical of the car
already without taxes and had no intentions to buy the car if it was within their budget.
For that amount of money there were many other cars available, which they would
appreciate more. The two experts also said that Tesla would loose a lot of customers, as a
result of the increase in taxes, as many current customers already were stretching their
budget. However, they did talk about buyers not caring about the price, who just wanted
the car, saying that the increase in taxes would decrease sales figures, but insisting they
were not that worried.

3.3.7 Implications of empirical results

The purpose of the qualitative studies was to uncover attributes for the conjoint analysis,
through thematic coding. Relevant themes have been discussed in the previous section
with price, acceleration, range of battery, charging possibilities and technology all being
significant themes in evaluating the car.

The interviews produced several more significant attributes to the car, but due to the
complexity of the conjoint analysis, the researchers had to be critical in their selection of
attributes for the final conjoint design. This meant, that compromises had to be made in
the selection process and here the thematic analysis was a great tool in selecting final
attributes. In addition, it should be noted that, even though the attributes has been
selected, the final conjoint design will be fully constructed in the quantitative study
(study 2).

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The potential themes to include in the final study were all revised and looked through
again resulting in some of them being removed. One such theme was safety, which
occurred in all interviews, but the one with the owners. The lack of the topic in this
interview was one indication to the relative unimportance, which was further backed by
the interview with non-owners. Here, all three participants agreed that it was implied in
a car of this stature that it would be unquestionable safe. As a result, this was left out.

Another relevant finding was the design of the car, which surfaced in three of the
interviews with only Mikkel Hilt not mentioning it in any significant matter. Although
design was spoken highly about and was regarded as important to the purchase decision,
the theme was left out of the final study, as it would be difficult to include in a conjoint
analysis. A written description of a design would be too open to interpretation and visual
stimuli would be too biased for a potential Design attribute. Also, the prospect of Tesla
not prioritising the design of future models seems unlikely, implying the managerial
implications of this stimuli would be lacking.

The fact that it is an electric vehicle and thus a zero-emission car resulted in the theme
environmentally friendly was left out as well, as any future models would most likely
be driven on electricity. The managerial implications of such stimuli would again be
somewhat lacking and the stimuli would thus not be very salient for the management.

3.3.8 Quality assessment of the qualitative study

The process of the qualitative interviews yielded some complications and revealed some
flaws, which could have affected the quality of the data and thus the end result. Looking
at all four interviews in general, the inexperience of the researchers becomes clear, as
both might have been too involved. The intervention of the assistant is also significant,
especially in the two focus groups, where both moderator and assistant becomes almost
equally engaged in the discussion. The division of the researchers in terms of who were
moderator and assistant was kept constant, this was done to allow the researchers to
gain experience and apply this experience to increase the quality of the questions along
the way.

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The inexperience of the researchers was also evident through the lack of elaboration on
certain comments and statement, which were left open to interpretation. An example of
one such statement, which later on caused doubts in the analysis as well as in the
selection of attributes, was the comfort of the car. Several times, Helge stated, that the
single most important thing for him was comfort, without elaborating what was meant
by comfort and without the researchers asking for further elaboration.

One way these fallacies could have been reduced was by the use of a pilot study. A pilot
study could have given indications as to where, the researchers inexperience became
evident, and thus how to improve on the actual study.

3.3.9 Validity and reliability of the qualitative study

A challenge in qualitative research is for the researchers to ensure that their research is
of a certain standard of quality and trustworthiness (Eriksson and Kovalainen, 2008). In
terms of validity and reliability, some concerns have been addressed in the previous
section, which can have an influence on reliability and validity. Furthermore, as
discussed previously in this paper, according to Krueger and Casey (2014), three to four
focus group interviews should have been conducted. The reality is, that for this paper,
only two focus groups has been conducted, and these differed in objective. This means,
that the results obtained are only drawn from one focus group, which causes for
relatively low reliability. In addition, both focus groups had just three participants, which
is considered a low number of participants, and might cause for an absence of potential
data. Furthermore, the diversity of especially the first focus group was lacking. More
diversity among enthusiastic participants and less enthusiastic participants might have
produced different statements and resulted in different attributes. The same can be said
about the second focus group, although no one was obviously influenced by other
participants, as with the first interview. However, more diversity would be desirable,
also because two of the participants knew each other well and thus had many of the
same viewpoints.

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In terms of validity and reliability the above discussion could prove to have
consequences for the conclusive study, as a similar study, if conducted, might be able to
prove. However, due to a limited network and resources, the researchers had to rely on
the participants availability. Time was another factor, which limited the possibilities of
conducting more interviews or recruiting more participants.

For the expert interviews it was concluded that the two interviews were sufficient for
the reliability and validity for the data needed for this part. This was concluded on the
basis that the interviews were conducted with sales personal from two out of three sales
offices in Denmark, and thus was deemed representative.

Apart from reliability and reliability, another concept to consider is the concept of
trustworthiness which is consisting of four sub concepts; Dependability, transferability,
credibility and conformability (Eriksson and Kovalainen, 2008).

In terms of dependability, an effort has been made to record every step in the qualitative part
of the study. This has been done through continuous explanations of both theory as well as the
findings that emerged from it. Furthermore, every step that was not explained in wording can
be examined further in the appendix.

As the study only concerns the Tesla Model S, the transferability of the study is limited to other
studies concerning this. The credibility of the study was enhanced through the method of
creating codes form the data extracted from the focus groups as well as the expert interviews.
To further ensure credibility, the researchers did the majority of the thematic coding
separately, thus minimizing the risk of making illogical coding that could decrease the
credibility of the study. Finally, the researchers has strived to achieve conformability by
disclosing all relevant qualitative data, either in the appendices or enclosed throughout the
analysis in the paper.

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4. Study 2
4.1 Quantitative method

This section contains an in-debt theoretical outline of conjoint analysis, as well as an
explanation of the practical use of conjoint analysis of this study. The analysis will
continue with a cluster analysis, and finally a discussion of both the results as well as
validity and reliability of the quantitative part of the study.

4.1.1 Introduction to Conjoint analysis

In marketing research, conjoint analysis has grown in popularity and has become the
preferred method for quantitative preference measurement. In addition it is considered
to be among the major contributors to marketing science and marketing practice (Netzer
et al., 2008).

The origins of the analysis goes all the way back to 1964 where R.D Luce and J.W Tukey
introduced their version of conjoint analysis (Luce and Tukey, 1964). Since then the
method has been modified and changed by various researchers. Professor Paul Green
from the university of Pennsylvania is one of the main researchers to influence conjoint
analysis, first with his article on the matter in 1971 (Green and Rao, 1971) and later in
1978 where Green and Srinivasan (1978) was, according to Netzer et al. (2008) the first
to apply conjoint analysis in a marketing matter. Since then, conjoint analysis has
become very popular underlying this was Green, Krieger et als (2001) statement that
Conjoint analysis is, by far, the most used marketing Research method for analysing
consumer trade-offs (Green et al., 2001, p. 57)

Conjoint analysis is a technique used to determine the relative importance consumers
place on various attributes related to a given product. The information is usually derived
directly from the consumers, where they are asked to evaluate a product-stimuli
consisting of different attributes, which they are presented with. From this the
researchers can derive the utility consumers place on the individual attributes (Malhotra
and Birks, 2007).

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The main underlying assumption is that brands, products etc. are seen as a bundle of
attributes that can be weighted and evaluated as a part of a larger process of helping
companies towards optimizing their product development phase (Malhotra and Birks,
2007).
Part-worth utility functions are derived from the conjoint analysis and describe how
consumers rate each product-attribute in terms of utility. Thus, using the part-worth
utility functions, researchers can calculate the total utility an individual receives from
any combination of the attributes in the study, through quantifiable scores (Malhotra and
Birks, 2007).

Conjoint analysis is primarily used in relation to product development where it is seen as
a useful tool, as it allows companies to combine attributes into a package that ensures
maximum customer satisfaction. Aside from this, conjoint analysis can also be applied to
a variety of other purposes, including the estimation of market share, segmentation of a
market and the determination of the composition of the most preferred brand (Malhotra
and Birks, 2007).

Typically conjoint analysis can be split up into two broad approaches, the pair-wise
approach and the full profile approach. The pair-wise approach (also called two-factor
evaluations) involves asking participants to evaluate two different attributes at a time.
This procedure is traditionally continued until all possible combinations have been
evaluated by the participants (Hanley et al., 1998).
The full profile approach (also called the multi-factor evaluations), which will be
applied in this paper, is an approach where a full profile of a brand or product is
constructed and then evaluated by the participants (Orme, 2002). Apart from the
construction of the profile, the full-profile approach also differs from the pair-wise
approach, by not necessarily including all possible combinations as a full profile
approach relatively easy can reach more than one hundred combinations. In the full-
profile approach the participants may only be presented with a fraction of the
combinations, with these combinations being representative of all possible

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combinations. A reduction of the number of combinations is usually conducted through a
fractional factorial design (Malhotra and Birks, 2007).
An approach to the fractional factorial design is called orthogonal arrays, and allows for
an analysis of all main effects on an uncorrelated basis (Rao, 2014). When applying the
orthogonal array it is possible two generate two different sets of combinations, namely
holdout samples and research samples. The research samples are the constructed stimuli
from which the part-worth utility scores are derived from, with the holdout samples
used to test the validity of the analysis. According to Malhotra and Birks (2007), the
overall validity of the research is influenced if preference scores are ranked differently.
This implies that the holdout samples are ranked differently, in terms of preference
scores, from the observed preferences derived through the survey and the calculated
preference using the utility scores from the research samples.

4.1.2 Pilot study

Before distributing the final questionnaire, a pilot study was conducted.
A pilot study is a study sent out before the concluding questionnaire, with the objective
of testing the study for any flaws or opportunities for improvements. This is especially
useful in relation with questionnaires where there are no interviewers to help clear up
any potential confusion as this is a self-completion questionnaire (Bryman and Bell,
2011).
To make sure that no participants responded to both the pilot questionnaire and the
final questionnaire, the pilot questionnaire was sent out to a selected group of people via
E-mail. In the E-mail the participants was urged not to respond to both pilot study and
the final questionnaire. The respondents were chosen on the basis of being
representative of the entire population in the study. The pilot study resulted in 43
respondents, but after eliminating incomplete answers and other invalid responses, the
number of valid participants was down to 23, which is below what Johanson and Brooks
(2009) suggests. According to them, a pilot test sample size should be at least 30,
however, there is no universal agreement as to how big a pilot sample size should be.
After the data was collected and analysed the pilot study revealed some areas for
improvement for the final questionnaire. Firstly, some participants in the pilot study
explained that they couldnt access the entire study, resulting in minor amendments and

Page 29 of 64
thorough testing. Secondly, the responses to the different stimuli showed signs of an
emerging pattern of either very low or very high satisfaction. As a countermeasure it was
decided to increase the range of the scaling measure going from a 7-point Likert scale to
a 10-point Likert scale. This would enable the respondents to give a more detailed
review of their attitudes towards each profile and hopefully increase the variance among
respondents. This variance would ideally increase the ability to explain different
phenomena that would emerge from the data collected. The data also revealed that some
respondents did not complete every page before moving on. Thus they have to be left out
of the final analysis and the subsequent conclusion. As a result questions in page two and
three were made mandatory to respondents in an attempt to try and eliminate
incomplete answers. Finally, it was decided to add an instructional manipulation test
(IMC) in order to sort out potentially biased answers. The theoretical assumptions
behind an IMC and further reasoning for its addition will be elaborated upon in the
following section. In addition to the adjustments highlighted above minor corrections
were made in terms of how some questions were formulated along with changes to the
visual design of the questionnaire.

4.1.3 Instructional manipulation Checks

As mentioned, a series of IMC questions were added to the questionnaire in order to
allow the researchers to detect participants who do not complete the survey thoroughly
enough (Oppenheimer et al., 2009).
The questions were at the end of the survey, and consisted of questions designed to
detect respondents who had discrepancies between their answers and their actual
believes. The IMC consisted of questions where the respondents had to evaluate to what
extent they agreed to a given statement such as Price is of significant importance in my
purchase decision. This question allowed for an evaluation of the psychological
investment made to the replies by the respondents. This example would allow the
researchers to remove respondents who, for instance, showed complete disregard to
price in the ratings of the combinations but still said that price was of high importance to
them.

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Even though the overall objective with IMC is to increase the validity of the study, there
are some potential drawbacks to using the method. First of all, by applying IMC there is a
chance that some participants who failed the instructional manipulation test would have
changed the outcome and therefore the generalizability of the study (Oppenheimer et al.,
2009).
Oppenheimer et al. (2009), further stated that some participants might feel insulted that
the researchers do not trust their ability to read, understand and respond to the
questionnaire. However, in this study it should not be a problem, as the IMC was used as
a tool for the participants to reflect on their opinions and attitudes.

4.2 Data collection

The data collection for the conjoint analysis was conducted through an online survey,
which was constructed on the basis of both expert interviews as well as the two focus
groups. The survey was split up into three sections, each section with its own objective.
In the first section respondents were asked to inform about their socio-demographic
situation as well as various questions about income and if they would consider
themselves a car enthusiast. This section was added to the survey to increase the
researchers understanding of the respondents as well as it would provide useful
information to be used in the cluster analysis.
The next section is the primary part of the survey, the respondents were asked to
evaluate eleven different profiles on a scale from 0-10. Before answering the survey, the
respondents were provided with information about the different profiles and other
relevant information. The information was presented in a way that sought to be as
unbiased as possible. This was done mainly through stating facts. However, it could be
argued that the respondents were exposed to some level of bias related the explanation
of the charging possibilities. In this case it was decided to visually highlight the locations
of charging stations for both Teslas supercharging stations as well as all other charging
stations.
The last page of the study was the IMC test, which was constructed on the basis of the
profiles. A question was included in relation to each of the factors, where the
respondents were asked to state their awareness of each factor, along with a question

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about how interesting they find Tesla in general. A copy of the survey can be seen in
appendix 13.
The survey was distributed through www.Facebook.com due the ease of access to a
potentially large sample size and the fact that the researchers had limited access to other
networks.
The distribution through Facebook generated 298 responses, but was eventually
reduced to 134 useful responses. The majority was deleted because of incomplete
answers, where the respondent had accessed the questionnaire without completing it,
even though measures were taken to avoid this, from the pilot study. SPSS further
enabled the researcher to identify respondents who had given the same rating to all
profiles, implying that they did not answer it truthfully.
Furthermore, some respondents were removed on the basis of the manipulation test.
Respondents who had clearly contradicting answers to the to the manipulation test from
what they answered in the profile-rating part was sorted out. An example of this was a
respondent who gave high scores to the expensive cars and low scores to the cheaper
alternatives, but stated in the manipulation test, that price was of great importance to
him/her. A single respondent was deleted due to being a Tesla owner.

The distribution of the socio-demographics of the respondents in shown below.
Undesirable respondents have been removed before the table was constructed. The
distribution is both shown in terms of frequencies as well as percentages.

Table 2 - Socio demographics

Frequencies Percentage
Gender Gender
Male Female Male Female
88 46 65,7% 34,3%
Age Age
30 years or 31 40 years 30 years or 31 40 years
below 26 below 19,4
25 51 60 years 18,7% 51 60 years
41 50 years 36 41 50 years 26,9%
38 28,4%

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 60 years or 60 years or
above above
9 6,7%
Place of residence Place of residence
Northern Jutland Mid Jutland Northern Jutland Mid Jutland
1 53 0,7% 39,6%
Southern Jutland Zealand Southern Jutland Zealand
69 1 51,5% 0,7%
Copenhagen Copenhagen
9 6,7%
Occupation Occupation
Craftsmen Executive Craftsmen Executive
9 position 6,7% position
Entrepreneur 34 Entrepreneur 25,4%
7 Mobile 5,2% Mobile
Public Employee Salesmen Public Employee Salesmen
20 13 14,9% 9,7%
Other Student Other Student
37 14 26,9% 10,4%
Current car Current car
Tesla Fossil fuelled Tesla Fossil fuelled
0 car 0% car
Hybrid 131 Hybrid 99,3%
2 Other EV 1,5% Other EV
0 0%
Price of current car (DKK) Price of current car (DKK)
Below 200.000 200.000 Below 200.000 200.000
42 400.000 31,3% 400.000
400.000 45 400.000 33,6%
600.000 600.000 600.000 600.000
26 800.000 19,4% 800.000
800.000 11 800.000 8,2%
1.000.000 Above 1.000.000 Above
6 1.000.000 4,5% 1.000.000
4 3,0%
Car enthusiast Car enthusiast
Yes No Yes No
65 69 48,5% 51,5%
Monthly salary (DKK) Monthly salary (DKK)
Under 30.000 30.000 Under 30.000 30.000

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 25 50.000 18,7% 50.000
50.000 70.000 55 50.000 70.000 41%
25 70.000 18,7% 70.000
Above 90.000 90.000 Above 90.000 90.000
16 13 11,9% 9,7%

The distribution of the sample is somewhat undesirable taken the product at hand into
consideration. The distribution of the monthly salary is a little low compared to what
would be considered as ideal. Furthermore, the Price of current car is also quite low
with 31,3% having a car costing less than 200.000, meaning that there is quite a big gap
to the price of a Tesla Model S. The implications of the sample distribution will be further
assessed in the Validity and Reliability section.

4.3 Conducting the conjoint analysis

The first step of the conjoint analysis was to identify the significant attributes and their
corresponding levels, which was done through the qualitative study (study 1). The
corresponding levels, which denote the values assumed by the attributes, were derived
partially from information obtained through the interviews and partially through a
realistic and logical perspective. Furthermore, the selection of both attributes and their
corresponding levels has been selected from both a theoretical and a managerial
standpoint (Malhotra and Birks, 2007).
The number of attribute levels was chosen with the participants evaluation task in mind,
as the accuracy of the participants evaluation would decrease if exposed to too many
stimuli. In addition, too few stimuli would make it difficult to predict much of the utility
towards the Model S, as it is a rather complex product. Thus, the attributes and number
of corresponding levels were carefully chosen in an effort to acquire a balance between
describing the product as much as possible while still being able to maintain participants
concentration throughout the survey, which is illustrated in the below table:

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Table 3 - Illustration of attributes and levels

Factors: Price Acceleration Charging Getting Range

updates
# Of levels: 3 2 2 2 3
(In DKK) (From 0-100 (Possibility of (Ability to (Distance on a
km/hour) charging) receive
full battery)
updates)
Levels 1: 800.000 1: 3.0 sec. 1: Free but 1: Yes 1: 190 km
limited
explained 2:1.200.00 2: 7.0 sec. 2: No 2: 499 km
2: Payable but
3: 1.500.00 extensive 3: More than 600
Km

As can be seen from the table above, a model of 3x2x2x2x3 attribute levels has been
chosen which yields 72 possible combinations. The outline of the final profiles for the
survey will be accounted for later in this report.

The levels explaining the attribute price were chosen on the basis of the average sales
price of a Tesla Model S in 2015, which was approximately 800.000, according to the
product specialist Mikkel Hilt (appendix 8). As the price of the car only will increase over
time due to the increase in taxes, the average price was chosen as a lower limit. The
prices 1.200.000 and 1.500.000 were chosen from realistic perspective, with the most
expensive car, at the time of research, costing approximately 1.700.000 DKK.
Furthermore, it was decided to increase the spread of the attribute levels for price, in
order to reflect the real-life price range and to account for the importance of this factor,
when conducting the analysis.

A binary form for the attribute acceleration was chosen as the three actual levels for
the cars acceleration was deemed to be too much for the respondents to comprehend.
The fastest currently available acceleration, a three second acceleration from 0-100
km/h, was selected as the fastest acceleration, as well as a fictitious slower version of
seven seconds. The difference between three and seven seconds was regarded
sufficiently large, to enable the participants to distinguish between them.

Page 35 of 64

Two levels were also chosen for the attribute of charging, with the first level being
Teslas own free supercharging network and the second level, the infrastructure of the
charging grid in Denmark, which is subject to payment. The reasoning behind choosing
this model was to examine the importance of the Model S having access to free
electricity, which also charges at a higher velocity. Hence, will potential customers accept
a small infrastructure (few stations) that are free of charge or will they appreciate having
many options and then pay for it?
The attribute of upgrade possibilities is also a binary model as it presents potential
customers with a yes and no option. The purpose is to identify potential customers
utility towards Teslas function of updating the car over the Internet, as it was highly
appreciated by the Tesla owners, however non-owners did not seem to appreciate the
prospect of it.

The attribute range has three levels, with the first level being the calculated average of
EVs on the Danish markets range (http://elbiler.dk, 2016). The second level is the
average range of the three Model S cars available on the market at the time of research.
The third level is a fictitious range of 600 km or above. The three levels are drawn from
the perspective of illuminating whether the current range of the Model S is acceptable to
customers or if the average for EVs is an acceptable range. The last level will explain if
potential customers will want a longer range, than the one Tesla can offer, and as such
consider the current range inadequate.

4.3.1 Constructing the profiles

As mentioned in Introduction to Conjoint analysis, this study has applied the full-
profile approach in constructing the stimuli/profiles. As all the possible combinations,
with a total number of 72 profiles, would not be feasible for the respondents, the number
of profiles to evaluate will have to be reduced. This will be done through an orthogonal
main effects plan, or orthogonal arrays design, which will be used as a fractional factorial
design.
The orthogonal design was generated using SPSS and resulted in 16 profiles plus two
holdouts. Out of these 16 profiles, the total number was further reduced with the

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proportionality rule (Rao, 2014) in mind, as the design used was asymmetric
(3x2x2x2x3) as opposed to symmetric design (2x2x2x2x2). The proportionality rule thus
says that, for a design to be orthogonal, each level of one factor should occur with each
level of another factor with proportional frequencies (Rao, 2014, p. 48). Although the
researchers strived to construct the profiles in accordance with this rule, it was later on
discovered that for the three profiles with price 800.000 DKK occurred with the same
level of charging on all three occasions. In addition, it was decided to conduct a within-
sample procedure with two holdout samples included in the questionnaire to be used for
validity. The results of the fractional factorial design can be seen in the below table.

Table 4 - Product profiles

Product Products Profile characteristics

Profile #
1 Price: 800.000 DKK
Acceleration: 3.0 seconds
Charging: Extensive but subject to payment
Receiving updates: Yes
Range: 190 km
2 Price: 800.000 DKK
Acceleration: 7.0 seconds
Charging: Extensive but subject to payment
Receiving updates: Yes
Range: 499 km
3 Price: 800.000 DKK
Acceleration: 3.0 seconds
Charging: Extensive but subject to payment
Receiving updates: No
Range: More than 600 km
4 Price: 1.200.000 DKK
Acceleration: 3.0 seconds
Charging: Free but limited
Receiving updates: Yes
Range: 190 km
5 Price: 1.200.000 DKK
Acceleration: 3.0 seconds
Charging: Free but limited
Receiving updates: No

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 Range: 499 Km
6 Price: 1.200.000 DKK
Acceleration: 7.0 seconds
Charging: Extensive but subject to payment
Receiving updates: Yes
Range: More than 600 km
7 Price: 1.500.000 DKK
Acceleration: 3.0 seconds
Charging: Extensive but subject to payment
Receiving updates: No
Range: 499 km
8 Price: 1.500.000 DKK
Acceleration: 7.0 seconds
Charging: Free but limited
Receiving updates: Yes
Range: More than 600 km
9 Price: 1.500.000 DKK
Acceleration: 7.0 seconds
Charging: Free but limited
Receiving updates: No
Range: 190 km
10* Price: 1.500.000 DKK
Acceleration: 7.0
Charging: Extensive but subject to payment
Receiving updates: No
Range: More than 600 km
11* Price: 1.200.000
Acceleration: 7.0 seconds
Charging: Free but limited
Receiving updates: Yes
Range: More than 600 km

*= Holdouts.

Page 38 of 64
4.3.2. The conjoint model
The model used for this conjoint analysis is a linear additive model and is applicable
where data has been collected according to an orthogonal array. Also, the model can be
applied where no interaction between the variables can be assumed (Rao, 2014). The
linear additive model can be described as:
!! = ! + !! !!! + !! !!! + + !! (!!" )

where y is the overall utility gained from the model, ! is a constant, !! is the component
utility function specific to the t attribute and !!" is the level of the j-th profile for the t-th
attribute (Rao, 2014). A model description for this research can be seen in Table 5.
Furthermore, all factors in the part-worth function are assumed to be discrete. The
factors range and price could be considered being linear in the part-worth function.
However it was concluded that there were not enough evidence from the pilot study to
conclude that these were linear. This was mainly due to a mixture of a small sample size
as well as inconclusive data.

Table 5 - model description

Attributes # of levels Relation to

ranks or scores

Acceleration 2 Discrete
Receiving updates 2 Discrete
Range 3 Discrete
Charging 2 Discrete
Price 3 Discrete

4.4 Empirical results conjoint analysis

The data was analysed through the conjoint procedure in SPSS, available through
command syntax. The output given in SPSS shows the calculated part-worth utility
scores for each factor level (Table 6) with each utility score representing the desired
preference for the corresponding level. Thus, part-worths can be added together to give

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an overall preference of any given combination of factor levels, as illustrated in the
previously mentioned model.
Table 6 - Utility scores and average importance scores

Factor Levels Utility score Average

importance
score
Acceleration 3.0 seconds -0,360 14,099
7.0 seconds 0,360
Receiving updates Yes 0,034 10,177
No -0,034
Range 190 km -1,798 35,018
499 km 0,765
More than 600 1,033
km
Charging Free but limited -0,001 11,503
Extensive but
subject to 0,001
payment
Price 800.000 1,207 29,203
1.200.000 -0,147
1.500.000 -1,061
(Constant) 4,068

The average importance scores indicate which factors are of importance in predicting
the preference for the product and which are less significant. The scores are calculated
by the range of the utility scores, from the lowest to the highest score for the given factor,
thus indicating that factors with a high utility range are more significant than those with
low ranges (IBM, 2012). The sum of the average importance score ads up to 100,
describing the total utility of a Tesla Model S. The researchers realize that this model
does not reflect 100% of the total utility of an actual Model S, as it is merely a relative
measure comprised of the chosen variables (Rao, 2014), gained through the qualitative
study.

When looking at the average importance scores for both Range and Price in Table 6,
it correlates with what Rao (2014) stated: Attributes with more levels systematically
achieve higher importances than those with fewer levels (Rao,2014, p. 44).

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Range has the highest average importance score of 35,018 with Price a little lower at
29,203 which makes sense, as they are the two factors with the largest number of levels.
The average importance scores further reveal that, apart from Price and Range,
Acceleration, Charging and Receiving updates receive 3rd, 4th and 5th highest
importance scores, respectively. This implies that Price and Range accounts for
64,221% of the importance, and the remaining 35,779% are accounted for through the
last three factors.
A utility level that is slightly surprising is that, respondents seem to favour acceleration
from 0-100 km/h at seven seconds over an acceleration of 0-100 km/h at three seconds.
This seems to contradict previous studies suggesting that the power and acceleration of
a car is of critical importance to consumers. One such study was conducted by Krah and
Fenske (2002) where it was concluded that power, acceleration and sportiness is of
great importance. However, the difference in utility for the two levels is rather small,
which could make it difficult to infer much of this factor. Another interesting observation
is Price and Range. These two factors were expected to be the most significant
attributes, however the order of the two was difficult to predict. The fact that Range is
the most important attribute indicates consumers awareness of electric vehicles issues
with long range driving, and that Range is prioritized higher than Price.
The results of the attribute Receiving updates is also somewhat surprising when taking
the findings from the qualitative study into consideration. It is the least favoured
attribute among participants, which contradicts what was said in expert interviews and
the focus group with Model S owners, where the attribute was highly regarded.
Charging is the second least preferred attribute with nothing to distinguish between
the two levels (Table 6). The results and implications will be further assessed in the
quantitative discussion and conclusion.

4.4.1 Predicted preference

The predicted preference is calculated through SPSS where the sum of the individual
levels utility score for the different profiles accumulates to a predicted preference. The
additive model therefore assumes that the predicted preference for all possible
combinations can be calculated from each levels utility score (Huber, 1975).

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This assumption does not necessarily hold in reality, as it might not be reasonable to
assume that each level contributes with the same amount of utility regardless of the
combination it is included in (Huber, 1975).
In this study it would for example imply that acceleration from 0-100 km/h would
contribute with the same utility regardless of what combination it is included in.
Table 7 - Rank of profile using predicted preference

Rank Profile number and description Predicted preference

1 Profile 2 6,4352
Price: 800.000 DKK
Acceleration: 7.0 seconds
Charging: Extensive but subject to payment
Receiving updates: Yes
Range: 499 km

2 Profile 4 5,9164
Price: 800.000 DKK
Acceleration: 3.0 seconds
Charging: Extensive but subject to payment
Receiving updates: No
Range: More than 600 km

3 Profile 10 5,35
Price: 1.200.000 DKK
Acceleration: 7.0 seconds
Charging: Extensive but subject to payment
Receiving updates: Yes
Range: More than 600 km

4 Profile 7 (holdout) 4,7233
Price: 1.200.000
Acceleration: 7.0 seconds
Charging: Free but limited
Receiving updates: Yes
Range: More than 600 km

5 Profile 1 4,4327
Price: 1.500.000 DKK
Acceleration: 7.0 seconds
Charging: Free but limited
Receiving updates: Yes
Range: More than 600 km

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6 Profile 8 4,2907
Price: 1.200.000 DKK
Acceleration: 3.0 seconds
Charging: Free but limited
Receiving updates: No
Range: 499 Km

7 Profile 6 (Holdout) 3,9841
Price: 1.500.000 DKK
Acceleration: 7.0
Charging: Extensive but subject to payment
Receiving updates: No
Range: More than 600 km

8 Profile 3 3,3792
Price: 1.500.000 DKK
Acceleration: 3.0 seconds
Charging: Extensive but subject to payment
Receiving updates: No
Range: 499 km

9 Profile 9 3,1521
Price: 800.000 DKK
Acceleration: 3.0 seconds
Charging: Extensive but subject to payment
Receiving updates: Yes
Range: 190 km

10 Profile 5 1,7952
Price: 1.200.000 DKK
Acceleration: 3.0 seconds
Charging: Free but limited
Receiving updates: Yes
Range: 190 km


11 Profile 11 1,5343
Price: 1.500.000 DKK
Acceleration: 7.0 seconds
Charging: Free but limited
Receiving updates: No
Range: 190 km

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As can be read in Table 7, the most preferred combination was profile 2 with a predicted
preference of 6,4352. When looking at the utility levels of each factor-level, this was also
to be expected. The extra utility gained when going from a range of 499 to more than
600, is not as large as the utility gained through receiving updates and the most
preferred acceleration.

The least preferred combination is profile 11 with a preferred preference of 1,5343.
Profile 11 has a price of 1.500.000, which is the highest price, and when combined with
the lowest range as well as not receiving updates, it becomes the least preferred profile.
All of the above predicted preferences were based on the entire sample, meaning that
there was not distinguished between any of the socio-demographic factors.

To get a more nuanced view of the valuation of attributes; the same results were
calculated based on whether respondents consider themselves a car enthusiast.
In Table 8, an overview of the average importance scores can be seen for car enthusiasts
and non-enthusiasts. Here it becomes evident that respondents who consider themselves
a car enthusiast value the range considerably higher than the respondent who does not.
Respondents who consider themselves a car enthusiast see range as the most
important with an average importance score of 40,966 and price as the second most
important with a score of 25,297. In contrast, respondents who do not see themselves as
a car enthusiast value the price of the car highest with an average importance score of
33,045 and range second most with a score of 29,097.
Table 8 - Car enthusiast vs. non-enthusiasts

Car enthusiast
Car enthusiast Not a car enthusiast
Acceleration 13,65 14,696
Receiving updates 9,611 10,836
Range 40,966 29,097
Charging 10,474 12,327
Price 25,297 33,045

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The valuation of attributes also differs when looking at the predicted preferences from
the two groups. The spread of answers from car enthusiasts increases in range relative
to the spread from the entire sample.
Table 9 - Difference between car enthusiasts and non-enthusiasts

Car enthusiast Not a car enthusiast

Predicted
Profile # Predicted preference Profile #
preference
Profile 2 6,62 Profile 2 6,25
Profile 4 6,25 Profile 4 5,59
Profile 10 5,89 Profile 10 4,84
Profile 7H 4,93 Profile 7H 4,5
Profile 1 4,92 Profile 8 3,97
Profile 8 4,63 Profile 1 3,97
Profile 6H 4,24 Profile 6H 3,74
Profile 3 3,85 Profile 9 3,51
Profile 9 2,77 Profile 3 2,93
Profile 5 1,53 Profile 5 2,04
Profile 11 1,02 Profile 11 2,03

Apart from the changes in the average importance scores, there were minor changes to
the ranked order of the most preferred combination of levels. The four most preferred
profiles remain at the top positions, but some of the other profiles are ranked differently.
This is mainly due to the change in the importance assigned to each factor, implying that
the main driving factor differs from car enthusiast (Range) to those who are not a car
enthusiast (price).

4.5 Cluster analysis

A cluster analysis is an approach used to classify objects or cases into groups that are
homogenous called clusters (Malhotra and Birks, 2007). The cluster analysis is a useful
tool in connection with conjoint analysis, as it allows the researchers to discover
patterns in the data that eventually allows Tesla to focus their resources on attributes
that are creating value to the consumers. Furthermore, this will allow Tesla to target
customers in a more specific manor through more intensive market knowledge.

Page 45 of 64
Other than this, cluster analysis allows for an increased understanding of the data, and
can ensure larger spreads throughout the scores for both factors and levels.

4.5.1 Outliers
Before running the cluster analysis the researchers checked for any potential outliers by
applying the formula for dissimilarity to all respondents as outlined below:

!"##"$"%&'"() = !!" !! !

!!!

The dissimilarity formula measures the average dissimilarity for each observation. The
dissimilarity calculation resulted in the removal of one observation, as the respondent
considerably differed from the rest of the respondents (table 10).
Table 10 Illustration of dissimilarity

Respondent # Dissimilarity
106 4,75
58 4,79
53 6,85

The removal of respondent number 53 brought the total sample size for the cluster
analysis down to 133 respondents, which is still adequate as the sample size for a cluster
analysis should be at least 100 (Malhotra and Birks, 2007).

4.5.2 Method

The cluster analysis was conducted on the basis of the part-worth utility scores
computed in the conjoint analysis. First, a hierarchical cluster analysis was applied to the
data set, with two to five cluster-solutions being tested in an ANOVA test. At a first
glance, an ANOVA test would show if any factors would become insignificant across
different clusters. Furthermore, the agglomeration schedule (appendix 15) gave an
indication as to how many clusters is appropriate for the data set. In addition to a
hierarchical cluster, a K-mean analysis was performed as well in a similar way. The

Page 46 of 64
 results of the two clustering procedures were checked for correlation in order to
determine which cluster-solution is best fitted for the data.

4.5.3 Deciding on the number of clusters

4.5.3.1 Hierarchical clustering

Deciding the number of clusters in a cluster analysis can be a complicated task as there is
no universal method in doing so. The point of departure was the hierarchical cluster
analysis using Wards method with squared Euclidian distance. Wards method was
chosen, as it is the most commonly used variance method in marketing (Malhotra and
Birks, 2007). To determine the optimal number of clusters, a method described by Punj
and Stewart (1983) was applied, where different combinations of cluster methods as
well as interval measures are applied in order to examine which combination yields the
most interpretable result.
The starting point was a 5-cluster hierarchical solution followed by a 4-, 3- and 2-cluster
solutions. The different cluster solutions were run through an ANOVA test to test for any
insignificance for the factors between the different clusters. As a result the 2-cluster
solution was dropped as it produced too much insignificance through the ANOVA test.
The 3-cluster solution was slightly better when measuring significance across the
clusters, however it still resulted in three levels being insignificant. The results from the
hierarchical clustering method eventually indicated a 4-cluster solution, which was
supported by the agglomeration schedule, indicated a 4-cluster solution (Table 11).
Table 11 - Agglomeration Schedule

Agglomeration Schedule
Cluster Stage Cluster Dif. In aggl % increase in #
Stage Coefficients Next Stage
Combined First Appears coeficient heterogenity clusters
Cluster 1 Cluster 2 Cluster 1 Cluster 2

128 1 1 695,711 119 116 129 54,341 7,8% 4
129 1 9 796,985 128 123 132 101,27 13% 3
130 2 3 900,859 126 120 131 103,87 12% 2
131 2 5 1030,501 130 127 132 129,64 13% 1
132 1 2 1301,741 129 131 0 271,24 21% 0

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4.5.3.2 K-means clustering
The non-hierarchical K-means cluster was performed in order to adjust the results found
in the hierarchical cluster, as a non-hierarchical cluster allows for rotation between the
clusters through iteration. Just like the hierarchical cluster procedure, two to five
clusters were performed. The results showed some variables were insignificant with two
and three clusters, just like with the hierarchical cluster solution.
A cross correlation test was performed on the different cluster solutions with Wards
method and the K-mean clustering solutions in order to identify which cluster solution
yielded the highest correlation. Here, the best correlation was with a four-cluster
solution, which gave a Pearson correlation of 0,414 (appendix 17).
The Pearson correlation indicates the strength of the relationship between the two
clusters, ranging from 1.00 to -1.00, with 0 indicating no relationship at all. The values
1.00 and -1.00 indicate a perfect positive and negative correlation respectively. Cohen
(1988) suggests that interpretation of the Pearson Correlation is done through the
following interval

- r=0.10 to 0.29 or r=-0.1 to -0.29 equals small correlation
- r=0,30 to 0.49 or r=-0.3 to -0.49 equals medium correlation
- r=0.50 to 1.00 or r=-0.5 to -1.00 equals high correlation

yielding a medium correlation for the four-cluster solution. Ideally the correlation should
be high indicating that the two different cluster methods would produce similar results.
As this is not the case it might turn out to be difficult to make any conclusions in relation
to segmentation of the data obtained, as it might decrease the validity of the findings of
this report.
Initially, a 4-cluster solution, using Wards method, was used as the final cluster solution,
which can be seen in Table 12.

4.5.4 Cluster results

The attributes for the four clusters are selected based on the mean utility from each
cluster (appendix 15), however, for some attributes little could separate the attributes,
which is indicated with a *. This can be seen in the factor Acceleration, as cluster two

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and three both were close to being indifferent. In the socio demographics it becomes
more evident that the cluster solution is not optimal, with little spread among the
variables. However, cluster four gives indications of respondents who said they were car
enthusiasts and drive expensive cars. When looking at the below table, as well as the
SPSS output in appendix 18, there seems to be a correlation between having expensive
cars, in this cluster, and having high monthly salaries. Respondents in this cluster also
gains the highest price utility with 1.200.000 DKK, indicating that they are more willing
to pay for a good car.
Age, occupation and current car were all insignificant (appendix 19), however age and
salary was included in the clusters, as they were decided as being significant to
segmentation for a product like the Model S.
Table 12 - Cluster solution

Cluster 1 2 3 4
# 46/133 39/133 20/133 28/133
34,59% 29,32% 15,04% 21,05%
Attributes
(most
preferred)

Range More than 600 499 Km 499 km/More More than 600 Km
Km * than 600 Km
Price 800.000 800.000 800.00 1.200.000
Acceleration 7.0 seconds 3.0 seconds* 7.0 seconds* 7.0 seconds
Updates No Yes No* No*
Charging Free* Free Subject to Subject to payment
payment

Socio-
demograph
ics
Sex Male 71,7% Male 69,2% Female 70% Male 75%
Age ** 41 50 years old 51 60 Years 41- 50 years 41 50 Years
34,8% 41% 40% 45,7%
Place of Mid Jutland Southern Southern Southern Jutland
residence 56,4% Jutland 61,5% Jutland 73,7% 46,4%
Occupation Other 28,3% Executive Other 31,6% Executive position
** (Executive position (Executive 25%

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 position 23,9%) 28,2% position 26,3%)
Monthly 30.000 50.000 30.000 50.000 70.000 50.000 70.000
salary DKK 47,8% 50.000 41% 45% 25%

Price of car 200.000 Below 200.000 600.000 800.000
DKK 400.000 43,5% 200.000 400.000 45% 28,6%
51,3%
Car Yes 50% Yes 51,3% No 80% Yes 64,35
enthusiast
* Indicates little difference in attributes. **=Insignificant variables

4.6 Discussion of quantitative study

The results of the conjoint analysis gave an average importance score for the five
attributes used in evaluating the Model S. Of those attributes, Range and Price were
the most significant factors explaining a combined 64,221% of the outcome in
consumers decision-making, with Range being the more significant of the two. When
considering the general consumer concerns of battery capacity and the speed of
charging, it makes sense that the amount of kilometres driven on a full battery is
considered to be very important. Receiving updates was the least important attribute
with an importance score of 10,177. This was slightly surprising when analysing the
results, as the Model S is the only car on the market known to the researchers, which can
be updated. It was something that both experts from Tesla and the focus group
consisting of Tesla owners appreciated very much, stating that it was the only car known
to them, which got better post purchase. The results could partially be explained by the
unawareness from the respondents, as it can be difficult to appreciate a rather unknown
concept, when never having experienced it. Through the IMC test, the researchers tried
to account for this by a question regarding participants perception of Receiving
updates, which scored relatively low at 5,23 compared to the other checks. However on
a 7-point Likert scale it would be considered a relatively high score (appendix 21),
indicating that participants did know, the possible implications of the feature. It can be
discussed though, whether the manipulation test fully apprehends this feature, as there
is a difference between understanding it and know the actual added value that it
generates.

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Charging also had a low average important score indicating it being rather insignificant
to the purchase decision for consumers of this study. This paper wanted to illuminate the
importance of Teslas free supercharging service compared to the possibility of paying
for the electricity, but having access to a more complete infrastructure. The results
indicated little, with participants being indifferent yielding a utility of -0,001 to 0,001,
which makes any indications of this attribute impossible. The reason for these results
could be the lack of knowledge of the participants towards the benefits of Teslas
charging system as well as the effect advantages of the payable infrastructure. It has
been discussed whether participants were exposed to a degree of bias in the visual
stimuli of the survey.

In addition, this paper found that a slower acceleration provided the respondents with
greater utility than a faster acceleration. This contradicted previous studies suggesting
that the power, acceleration and general sportiness of the car was of great importance
(Krah and Fenske, 2002). However, the utility scores for both three seconds as well as
seven seconds were close to zero, meaning that nothing can really be concluded on the
basis of this. Linking these findings together with the focus group of non-owners gives
indications as how this might be. One of the participants stated that, from personal
observations, Tesla owners were driving unusually slowly. He thought that it might be
due to them having to wait so long every time they have to charge, indicating the
awareness of a correlation between having a powerful car and the speed of which it uses
empties the battery. In addition though, the main indications from the qualitative
interviews, both focus group and expert, was that the power of the engine had a pivotal
role in the purchase decision of a new car. These findings thus contradict each other,
giving further indications to the discussion of the sample for the qualitative study not
being representative.

However, another study, which also studies attributes of cars, shows somewhat similar
results in regards to acceleration. In the study concerning subcompact cars by Wu et al.
(2014) they found that only 11,581% of importance accounted for Power (Wu et al.,
2014). The studies differ however, as the study of subcompact cars focuses on the power

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of the engine, with this study emphasising on the acceleration alone. However, the
results goes on to indicate that, participants of that study, does not consider engine
power as important, relative to the other attributes presented in that study.

Furthermore, the cluster analysis goes on to illustrate the importance scores of the
different attributes, obtained in the conjoint analysis. By analysing the mean utility
scores of the different clusters (appendix 15), it shows that the average importance
scores from the conjoint analysis are reflected in the cluster analysis. If looking at
Range, this is illustrated by the gap between the lowest and highest score 2,03-(-
2,73)=4,76 in cluster four. The utility gap for price was in cluster one even higher with
a difference of 4,843. Thus, the relative differences in importance scores are not reflected
equally between the two analyses. This can be explained by the differences among the
clusters, as cluster two prefers a lower range, and thus the levels tend to balance the
scores out and as a result reduces the gap for Range.

In contrast, the lowest important score in the conjoint analysis was Receiving updates.
This is also reflected in the cluster analysis when looking at cluster two and three. The
mean difference in the third cluster is 0,04 and 0,06 in the fourth cluster.

The cluster analysis was, in addition to examine if any segmentation of the participants
could be made, used to check whether the levels with low importance were significant
across the clusters. This was done through an ANOVA analysis (appendix 14), showing
that all factors are significant across the four clusters, meaning that there is a significant
difference between the clusters for each level. Although the ANOVA analysis shows that
all are significant, it is worth noticing that some of the low-important scores from the
conjoint analysis have relatively low differences in utility, indicating that, for these
scores, they have minor implications for the total utility. This is also illustrated in the
aforementioned example. Also, respondents in cluster three are relatively indifferent
when choosing range with a gap of only 0,18 between 199 km and more than 600 km,
and are indifferent between 499 and 600 km indicating that range is of low importance
to members of cluster three. This phenomena could be explained by the fact that 80% of

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respondents in cluster three say they are not enthusiastic about cars, which is also
reflected in the purchase pattern for respondents in this cluster, with 85% having a car
ranging from below 200.000 to 400.000 DKK.

4.7 Limitations
The conjoint analysis was conducted on the basis of an orthogonal design, meaning that
only 11 of 72 possible profiles was examined and valuated by the respondents. Even
though this is a fairly common approach to conjoint analysis, further tests must be
conducted in order to test the consistency of the study.

As mentioned previously, there are several attributes that have not been taken into
consideration. Especially attributes such as brand, design and image, which are
somewhat intangible, and was in this study considered as being too extensive to include.
The study only included attributes and data regarding the Tesla Model S, meaning that
the direct applicability of this papers results in the production of future electric cars by
Tesla Motors is somewhat limited. It should however be mentioned, that the paper
examined attributes appropriate of having management implication to the extent
possible to this paper.

Given the complicated nature of an electric vehicle, it was not possible for the
researchers to conduct a research that was both complete as well as still being reliable,
valid and generalizable. Furthermore, both the scope and timeframe of the paper limits
the true value of the study. Meaning that the study can only determine that there is a
correlation between observations rather than explaining the causation behind.

The study was distributed through Facebook, meaning that the respondents primarily
consisted of friends and family, meaning that there was not a great diversity in
respondents in terms of geographical spread.
The spread in age group was also quite big, though with the majority being younger than
the typical Tesla customer. This came down to two factors. Firstly, Tesla was at the time
not able to specify their typical customers or their target customer due to the spread in
age being so large. Secondly, since Facebook was applied to distribute the study, there

Page 53 of 64
was a limit to how many respondents the researcher would be able to obtain, the
researchers therefore could not afford to make any age restriction, even though it might
have been favourable to focus on respondents older than 30 years old. Using Facebook
has also the implication, that the sample is not randomly sampled.

4.8 Validity & reliability

When evaluating the data from the conjoint analysis it shows a rather high spread from
the least desired profile of approximately 1,5 to the most desired of 6,5, which could be
due to the relative complexity of the product. Also, when looking at table 9 for car
enthusiasts responses vs. non-enthusiasts, the spread becomes even wider than the
original sample, indicating that enthusiasts have stronger preferences, which will give a
wider spread. However, as Orme et al. (1997) states, question marks could be raised as
to wether respondents evaluate a full-profile stimuli constructed in a survey the same
way they do, when evaluating the same product in real life. This could to some degree be
the case for car enthusiasts, as they would evaluate from a perspective of interest rather
than realism. If that is the case, this could be a point of concern when dealing with a
product as complex as an electric car, and something that must be taken into
consideration, when evaluating the results. In addition Orme et al. (1997) also states,
that high-involvement purchases, like an expensive car, could be a concern for the
validity of conjoint analysis.

However, there are several measures that can be taken in ensuring a higher degree of
validity and reliability when conducting a conjoint analysis. One such measure is the use
of holdout samples. As mentioned previously in this paper, the holdouts were included in
a with-in-sample, implying that they were presented in the questionnaire as stimuli.
They were then left out of the conjoint analysis, so that they could be predicted by the
estimated part-worth functions. By comparing the predicted holdout samples derived
through the survey with the holdout stimuli calculated through the conjoint model, using
the part-worth functions, one can assess the internal validity of the study (Orme et al.,
1997).

Page 54 of 64
The predicted holdout sample, was calculated according to the conjoint model of the
study, and then correlated with the preference scored obtained through the
questionnaire.

!!"#$%&' ! = 4,068 + !""#$#%&'()* 0,360 + !"#$%&' 0,034 + !"#$% 1,033

+ !!"#$%# 0,001 + !"#$% 1,061 = 4,368

!!"#$%&' ! = 4,068 + !""#$#%&'()* 0,360 + !"#$%&' 0,034 + !"#$% 1,033

+ !!!"#$" 0,001 + !"#$% 0,147 = 5,347

The analysis yielded a Pearson Correlation of 0,839 for the first holdout (Profile 6) and
0,653 for the second holdout (profile 7) (Appendix 20). According to Cohen (1988), a
correlation score of more than 0,5 can be seen as a strong correlation, which is true for
both holdout samples, with very high correlation for profile 6. Although the score for
both profiles indicates a high correlation, this is not necessarily the case in practice.
When looking at the rankings of the two profiles in table 7 it shows that both profiles
gain a rank, when calculating the predicted preference, compared to the observed from
the survey. These results indicate that the validity of this research might be flawed and
will be taken into consideration, when evaluating the overall research question.

The IMC test was another measure, which was incorporated in order to gain higher
validity. As mentioned in the data collection, the IMC was used to filter out those
respondents who gave ambiguous answers, such as choosing all expensive cars, but
admitting to be very price sensitive. This measure of validity was added after a pilot test
was distributed, also as a mean of obtaining validity. The pilot test gave indications to
improvements, such as a question to respondents general interest in Tesla as well as it
should have provided indications as to what could be expected of the complete data set.
However, as the pilot test was flawed, in the sense of the distribution and the amount of
useful responses it was decided that there was not enough evidence to infer whether any
factors in the part-worth functions could have been linear instead of discrete.

Page 55 of 64
The aim was to get approximately forty respondents. However, this was not fulfilled and
as a result limited changes could be taken as a direct consequence of the pilot study.

Reliability of a study can be assessed by how well the results obtained through the study
can be replicated. A measure that can be taken into account, when increasing reliability
is the test-retest procedure. This can be done by repeating the data collection, or some of
the data collection, on the same participants. It could be randomly selected participants,
who were asked to do the survey again after some time of completing it the first time.
The two test results are then correlated to give an indication of how the same
participants responded to the same stimuli with some time apart. However useful this
measure would have been in obtaining reliability, it was not included in this study due to
time limitations.

The time issue that the researchers were faced also reflected the sampling process. As
briefly explained in the data collection, the socio-demographics indicate that the majority
of respondents are not within the desired target group, with many having low income
and driving a car in lower price range, relative to the prices of a Model S. As a result, the
cluster solutions were very homogenous and little can be referred from the clustering
results, which makes any generalizability difficult and external validity non-existing.

The survey was distributed through Facebook and asked for people who had a car. This
could have been specified more correctly by narrowing down the description of desired
participants further. In addition, the post on Facebook received some feedback stating
that the survey was too long with too many stimuli. These responses were replied to and
then deleted in order to not affect other respondents. The feedback was also entirely
from respondents, who were well outside the target group, meaning that they were not
regarded as indications of a bad survey. The researchers were very conscious in
constructing a survey that would be manageable for the majority of respondents in order
to get the best possible responses.

Page 56 of 64
5. General Discussion and conclusion
5.1 Discussion
This paper has addressed the key attributes in a Tesla Model S are, and how these
attributes are valued by potential buyers. However, there is no straight answer to this
question as an electric vehicle is a very complex product with numerous attributes.
There are several, probably significant, intangible attributes in an electric vehicle that
were not studied in this paper; attributes such as image and design, were not included in
the conjoint analysis, but was briefly discussed in the qualitative interviews conducted in
the beginning of the study.

Electric vehicles is in general a relatively new line of products in the eyes of the
consumers, and consequently people might not have established the preference-base
that is needed to really understand and individualize each of the attributes. In addition to
this, there was a great difference among respondents general interest in cars. The
researchers attempted to account for this uneven distribution of interest, through the
use of the question: Do you consider yourself a car enthusiast, with the objective for
this question to be used as a mean to characterize respondents in an attempt to increase
understanding of the sample. However, it might have been beneficial to include a more
tangible question that was not as subjective to interpretation as the case was. This meant
that 48,5% of the respondents considered himself or herself an enthusiast.

The internal validity was attempted increased through a pilot study, which served
multiple purposes. However, distinguishing between discrete and linear variables in the
conjoint analysis could have increased the validity, but the lack of evidence to back this
was not obtained, meaning that all variables were left as discrete.
Due to the scope and timeframe of the experiment, it was not the intention to make a
generalizable study, rather it was attempted to investigate the various attributes
affecting the buying intention of a Tesla Model S. This was mainly due to the fact that the
study was conducted completely independent from Tesla Motors. The studys lack of
generalizability is obvious when considering the fictitious nature of the profiles that was
combined, even though respondents were told only to value each combination on the

Page 57 of 64
basis of the attributes presented to them. Thus, it is hard to imaging a situation where
respondents do not have a predetermined idea of their assessment of the product in
general.

In evaluating the Model S, conjoint analysis was chosen as the leading study with
qualitative interviews as a secondary, but integral study. The conjoint study has been
useful in identifying key attributes of the Model S and how these attributes drives
potential customers preference towards a potential purchase. This has been done
through creating nine fictitious profiles, which participants have been asked to evaluate
through a survey distributed through Facebook.
The results obtained through the survey should however be considered on the basis of
the discussion for validity and reliability, as there are several constraints to the overall
quality of the data. As accounted for previously through Orme et al. (1997), people
evaluate stimuli presented in a conjoint analysis differently from a real life purchase
evaluation. This has to be taken into consideration, especially when considering the
nature of the product. Furthermore, the limitations that the researchers faced, both in
study 1 and study 2 needs to be addressed in relation to evaluating the final results.
If the study should have managerial implications for Tesla, the researchers need more
resources and more time. The current research demonstrates a research design, which, if
conducted on a larger scale, could generate useful results. This could be by implying a
moderated approach to potential customers in order to give them an experience as to
what the car has to offer, instead of a brief description in a survey.
Such an approach could be more field-oriented where the participants would get a more
tangible experience with the car, which is backed by Rasmus from the Tesla office in
Aarhus who states that customers are more prone to buy the car after they have
experienced it through a Test drive (Appendix 1).
The paper in general sat out to approach the problem more or less from scratch, as
knowledge concerning consumer preferences towards a Model S in general is rather
scarce. Every step of the research was conducted on the basis of the previous step, and
every step was explained fairly detailed to help the reader towards an understanding of
the choices made.

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5.2 Conclusion
This paper sat out to examine what characterizes potential customers preferences
towards a Tesla Model S. The method applied was a sequential mixed method consisting
of a qualitative and quantitative study.
The qualitative part was initiated with two expert interviews followed by two focus
group interviews. The focus group interviews were transcribed and thematically coded
to enable the researchers to construct a statistical model capable of estimating consumer
utility towards certain attributes on a Tesla Model S. Apart from identifying key
attributes, the focus groups also had the purpose of identifying attributes which could be
considered as being redundant to they study. These attributes were mainly identified as
being implied as an attribute to a car like the Model S and thus an attribute like safety
was excluded on this premise. Other attributes, such as design and environmental
friendliness, were excluded on the basis of lacking managerial applicability, in where the
importance score of such an attribute would have little influence regardless of the
relative importance score.

The qualitative study ultimately resulted in 5 attributes; Price, Range, Acceleration,
charging possibilities and the ability to receive updates, which were included in the
conjoint model. The final model yielded an asymmetric design in that Price and Range
each had three levels with the three remaining attributes having binary levels. The
model produced 72 different combinations, which was reduced through the fractional
factorial method of an orthogonal main effects plan. Ultimately 9 stimuli and 2 holdout
samples were decided for analysis through a questionnaire, which would provide the
quantifiable data needed for the conjoint analysis.

The conjoint analysis established that Range was the most significant attribute
followed by price, acceleration, charging and receiving updates being the least significant
in explaining consumers utility towards the Model S. Range and Price explained a
combined 64,221% of the total utility and as a result is considered as being the main
drivers for potential consumers towards a purchase. In addition, it can be concluded that,
for this study, the empirical results indicated that receiving updates had limited

Page 59 of 64
influence in consumers purchase decision. It has been discussed whether the validity of
this attribute is sufficient for any conclusions to be drawn, as the sample for this study
does not reflect an optimal target group sufficient for this paper. Furthermore, it was
discovered through the IMC test, that respondents had most difficulties in appreciating
effects of this attribute. It was thus implied that respondents did not have sufficient
knowledge to evaluate the actual features of this attribute. Hence, the results of the
conjoint analysis, in regards to this attribute, will as a consequence not be conclusive, but
rather be able to give a small indication of the true utility of this feature.

Charging were equally perceived as a rather insignificant factor to consumers overall
utility and thus to their purchase decision. Again, it has been discussed wether
participants were able to appreciate the true values of the two different levels. Although
the IMC scores showed that participants understood the importance of this attribute, it
could be considered if the question was open to interpretation. In addition, it has been
mentioned the potential bias participants could have been exposed for in the survey,
which could have influenced the results.

Acceleration was the 3rd highest influencer in consumers purchase intention towards the
Model S and described approximately 14% of their overall utility from the study. The
results further showed that respondents preferred a slower acceleration to the 3
seconds from 0-100 km/h that it currently is capable of. This result is rather unexpected,
as the qualitative interviews gave a clear indication that engine-power and momentum is
a desired attribute. However, it was discussed that it might be due to participants
considers the extra thrust from a high acceleration will cause a significant loss of
electricity and as a result reduce the range. These are merely speculations as the only
indications to this come from the qualitative interview with non-owners. Additional
measures would have to be applied in the sampling process in order to unfold if any
psychological reasoning is behind the results.

To further investigate the findings from the conjoint analysis, a cluster analysis was
conducted. The four clusters reflected to some degree the findings of the average

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importance scores. All but one cluster gained most utility through a low price with the
fourth cluster preferring a price of 1.200.000. The price was also, according to the cluster
analysis, the most significant attribute, in that it had the highest spread between lowest
mean utility and highest. This contradicts the results from the conjoint analysis, but can
to some degree be explained in the distribution of utility across the clusters, as Range
is more evenly distributed across the clusters relative to Price.
It also shows that Receiving updates is of lowest importance through the difference in
mean utility between the highest and lowest score.

This paper has examined the most important attributes in evaluating a Tesla Model S as
well as given an indication as to how these attributes drives potential customers
preferences towards a potential purchase. However, through the natural shortcomings in
terms of validity and reliability, the results of the research will have limited backing. As
a result, the managerial applicability of this study is difficult to claim, as a more
comprehensive study would have to be conducted, in order to have any managerial
implications. For the results to be salient for the management, a study without any time
constraint and with more resources would have to be conducted. Through the
experiences of this study it could be discussed if it would be feasible if participants
would get a more tangible experience with the car instead of a small description and a
few visual stimuli in the survey. The three lowest ranking attributes could all be
perceived differently through experiencing the value that each of the different levels
have.

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