All of the Market Simulation nodes have been enhanced so that they can handle both Dynamic Prices and Dynamic Costs. The original ‘Static Price’ found in the ‘Input Product Array’ can now be adjusted by Dynamic Prices. These prices are found in the ‘Input WTP Matrix’ and can be personalized for each Customer. For example, some Customers may be entitled to the percentage Discount found in the ‘Price Adjustment Variable’ (PAV) column, and other Customers may need to pay the personalized delivery charges found in the ‘Price Adjustment Fixed’ (PAF) column. Each Customer’s Personalized Price = Static Price x PAV + PAF.
The enhanced nodes with Dynamic Prices include:
- Product Generator node
- Bundle Generator node
- Simulate Market node
- Price Maximize node
- Price War node
- Scale Distributions node
- Demand Curve node
- Price Sensitivity node
Price Adjustment Variable (PAV): The Price Adjustment Variable (PAV) is the percentage adjustment to the Price (typically a Discount) a particular Customer would receive when they Purchase the Product. For example, if the Customer is entitled to a 10% Discount then the ‘PAV’ would be set to 0.90. The ‘Price Adjustment Variable’ column is identified by the Product’s Name followed by a trailing ‘PAV’. The ‘PAV’ designator can be upper-case or lower-case and may-or-may-not be separated by a space, underscore, or other single character. For example, ‘Product_01_PAV’ or ‘Product 02 PAV’ or ‘Product03pav’.
Price Adjustment Fixed (PAF): The Price Adjustment Fixed (PAF) is the fixed adjustment to the Product’s Price. For example, if Customers pay different amounts for Shipping the Product then this could be modeled using the ‘PAF’ column. If the WTP Matrix contains both ‘PAV’ and ‘PAF’ columns, then the Price is first multiplied by the variable ‘PAV’ before adding the fixed ‘PAF’. The ‘Price Adjustment Fixed’ column is also identified by the Product’s Name followed by a trailing ‘PAF’ in a manner similar to the ‘PAV’ designator.
Example Workflow: MS-242 Dynamic Prices
The Product Generator node iterates through the Input Product Features table and aggregates together all of the matching Customer Distributions found in the Input Customer Distributions table.
The Scale Distributions node is designed to take Willingness To Pay (WTP) Customer Distributions for Products from the Input WTP Matrix and scale them by either a fixed amount or until a target Market Share is reached.
The Price Sensitivity node is designed to take a set of Products in a Market and determine the sensitivity each Product has to a change in Price by each of the other Products.