Shift Towards Competitor’s Positioning
This Market Simulation is designed to predict what would happen if a Competitor were to shift their Positioning so that their Product looked more like that of a Rival’s Product.
Background: Roewe is the up-and-coming, high-end SUV in China. Their Products are designed and manufacturer in China, and are positioned towards the luxury end of the Market. They mostly compete against European manufacturers: the Audi Q5 mid-sized SUV and the Mercedes Benz GLK mid-sized SUV.
Fictitious Scenario: Roewe envies the market Positioning enjoyed by Audi. To improve sales and profitability, Roewe decides to copy many of the Features and Brand qualities of the imported Audi vehicle. The result is a new Product that is mid-way between the existing Roewe and the existing Audi in terms of customer perception, price, and cost.
The result is an unmitigated disaster! Instead of attracting the expected 81,000 customers, or even the previous 73,000 Roewe customers before the change, the new Roewe only attracts 2,000 customers!!
This phenomenon is sometimes described as a “crossing the chasm” problem. The new Roewe is “neither here nor there”. It no longer is the same vehicle that the old Customers loved, and it is still not good enough to attract Audi Customers.
Note that the data used in this Market Simulation comes from the SUV Tuning Case Studies:
#1 Shift Positioning
Roewe shifts their Positioning to close the gap between it and Audi. To do this, it shifts the Willingness To Pay (WTP) of Customers half-way from Roewe’s existing Position towards the WTP that Customers have for the Audi Product.
To do this requires only a very simple mathematical expression applied to the Willingness To Pay (WTP) of each Customer:
New Roewe WTP = ( Old Roewe WTP + Audi WTP ) / 2
#2 Shift Price
- Expected Quantity
Each of these Product attributes for the new Roewe also need to be shifted half-way towards the Audi Product. This is done by the ‘GroupBy’ node which takes the Mean (average) of the Roewe attribute and the Audi attribute.
#3 Predict Results
Unfortunately the predicted results are not good news for Roewe. Roewe expected to attract 81,000 Customers for the new Product (up from 73,000 Customers for the old Product). But the new Roewe SUV only attracts 2,000 customers, and Profitability drops by over 90%.
See also: CN-141 Simulate Market Node