Extend Market Node
The Extend Market node is designed to take what is known about a few Products, a few Stores, a few Brands, and a few Locations in order to project outwards and create a wider Market.
The Extend Market node may be located downstream of a Tune Asymmetric node. Thus placed, it could take calculated Competitor Factors that describe the Differentiation offered by each Competitor Store and apply them to the Identical Products sold by the Focus Store in order to flesh out a whole Market.
But the Extend Market node can also be used in other situations. For example, the Extend Market node may apply Location-based Competitor Factors to modify the Willingness To Pay (WTP) of Products from one Location in order to reflect the different values of Customers from another Location. In this case, these Location-based Competitor Factors may reflect the different needs and different level of affluence between Customers from the two Locations.
The Extend Market node is designed to take what is known about a few Products, a few Stores, a few Brands, etc., and project outwards to create a wider Market which includes other vendors selling similar Products. The user can manually change the characteristics of similar but un-tuned Competitive Products using ‘Competitive Factors’ generated through their own expertise.
Input Product Array
The set of Products from the Focus Store as well as from Competitor Stores that define the wider extended Market. Each row corresponds to a Product that competes for customers in the Market.
Input Competitor Factors
The Input Competitor Factors contains information that describe how each Brand, Store, Location, Family, Category, and Platform will differentiate the original Product from the Input Product Array. These Competitor Factors will be applied to each of the Base WTP Customer Distributions so that the resulting Output Customer Distributions can be aggregated together into a wider Market. Any missing Brand, Store, Location, Family, Category, or Platform value will be treated as a match.
Input WTP Matrix
Contains the set of Product-level Customer Distributions for the Products found in the Input Product Array. Either the ‘Unique Product’ or the ‘Identical Product’ (or both) from the Input Product Array must match a column in this WTP Matrix. The Customer Distribution columns from this WTP Matrix will be modified by the Competitor Factors: ‘Mean Factor’, ‘SD Factor’, and ‘Correlation Factor’.
Input Price Elasticity
Additional measurements that can be used to tune the Market Simulation. Analyzing historical sales data often yields information about the Price Elasticity of individual Products, and about the Cross Elasticity between Products in the Market.
After the Market has been extended the Market Simulation Profit Engine can be run. The results of the Market Simulation will override the Input Product Array Quantity, Revenue, and Profit. Note that the Total Available Market (TAM) in the Output Product Array can be set in the advanced Market Size tab of the Configuration Dialog Box.
Output Product Array
The Output Product Array corresponds to the Input Product Array but with updated values in the ‘Mean’ and ‘SD’ columns that reflect the shifted WTP Customer Distributions.
Output WTP Matrix
The transformed Willingness To Pay (WTP) Customer Distribution matrix for each Unique Product column in the Market by each Virtual Customer row. The WTP Matrix quantifies the maximum Price that each Customer would pay for each Product in the Market. The Output WTP Matrix has been extended from including just the minimum number of ‘Identical Products’ to also include all the ‘Unique Products’ listed in the Input Product Array. This WTP Matrix can be directly connected to a downstream ‘Profit Engine’ node.