What Does Optimization Mean?
Your product or service is in a competitive market place. Optimization is the process by which you determine what combination of features along with price and brand name is optimized based on your objective. That objective could be to maximize sales, maximize profit or maximize market share.
What Can Be Optimized?
Often features of a physical product are more or less fixed. This is especially true in the highly regulated crop input market or animal health market where changing basic features of a product are hard to do or are very least costly and take time. Some product features maybe tweaked, however, price is a key variable that is easy to change, however, the problem is that your competitors can also change their price either pre-emptively or in reaction to changes that you make. Knowing what impact your price changes and that of competitors on sales, market share or profit is very important.
Optimization of features, including price, for products or services in which their features can be readily made or re-designed, are very important to reach the objectives of maximized sales, profit or market share.
Brand equity is the premium that a company makes from a product or service with a recognizable name, when compared to a generic equivalent. iFusion can measure Brand Equity, providing information to optimize the design of a new product or service or re-position an existing product or service including making more profitable pricing decisions.
Traditional Approach has Flaws
Simply asking people what they want, they will say “The best of everything”. Simply asking what they want to pay, they will say “As little as possible”. Accessing consumer preferences and willingness to pay through direct rating scales, with separate questions about product features and prices often fails to capture trade-offs that underlie choices.
Dynamic Solution to Make Better Decisions
iFusion uses a technique called “Conjoint Analysis”. This technique provides a more realistic approach to how consumers actually make choice decisions based on what is in front of them. It presents combinations of features or attributes along with prices and brand names and asks people to make choices among profiles. With this approach we can model how the market will react to different design features, brand names and prices. Click here for a Technical Paper on Conjoint Analysis.
We can develop price sensitivity models, understanding the impact of competitive price changes and use market simulators to access market share, sales and profit in ”what if” scenarios.