What If Product Node
The ‘What If Product’ node is designed to take a sub-set of Products and determine how a user-selected change will impact each Product in the Market.
For example, the user can configure the ‘What If Product’ node to lower the Price of the Focus Product as well as the Focus Product’s top competitive rivals. This may simulate a likely competitive response to the Focus Product lowering Price. Alternatively, the ‘What If Product’ node might simulate the worst case Scenario of all Products in the Market lowering Price to match the Price reduction of the Focus Product.
An important and unique capability of the ‘What If Product’ node is called ‘Portfolio Pricing’. Portfolio Pricing systematically makes small Price adjustments over a number of iterations to each Product in the Portfolio in an effort to find a better selection of Prices. The goal of Portfolio Pricing is to increase overall Quantity Sold, overall Revenue, or overall Profitability while maintaining the average overall Prices. At the same time, restrictions ensure that the other Product Metrics Quantity/Revenue/Profit not being optimized are maintained. Portfolio Pricing identifies opportunities to extract more Profit from the same number of Customers. Maintaining Market Share is not only important from a Sales, Marketing, and Operations perspective, but it is also important from a Competitive perspective. If average Price and Market Share can be maintained, then Competitors are much less likely to view the Price changes as threatening. Hence a negative Competitive reaction or even a Price War can be avoided.
What If Product
The What If Product node makes a user-defined change to a sub-set of Products and predicts how that change will impact the entire Market. For example, the user can predict the ‘Worst Case Scenario’ should the Top Competitive Rivals react after the Focus Store discounts their Product Prices.
Input Product Array
The set of Products that define the Market. Each row corresponds to a Product that competes for customers in the Market.
Input WTP Matrix
The Willingness To Pay (WTP) Customer Distribution matrix for each Product column in the Market by each Virtual Customer row. The total number of Virtual Available Customers is equal to the number of rows in the WTP Matrix.
The user specifies the method by which the Products in the ‘What If Product Set’ will be changed. The Price can be raised/lowered by a percentage. The Profit Margin can be raised/lowered by a percentage (Cost data is required). Or the Price can be raised/lowered by a fixed amount. In addition, the Products can be set to their short-term profit-maximizing Price (not taking into account competitive reaction). Other Scenarios also include setting the Prices to be ‘Free’, setting the Products to be ‘Out of Stock’ (by setting the Price to infinity), and changing the Cost of the Products.
What If Results
Lists the degree by which each Product in the Market was changed (if at all) and the impact of the change on each of the other Products in the Market.
Output Product Array
The output Product Array corresponds to the Input Product Array but updated to reflect the impact of the ‘What If Scenario’ outcome.
Purchased Products List
The list of Products purchased by each Virtual Customer. The user can use the views to hilite the Customers of interest who switched their purchase decision. These Customers who switched as a result of the ‘What If Scenario’ change can then be further analyzed.
Output KPI Indicators
The Output KPI Indicators contain select information about the tuning process and the quality of the final results.