Sensitivity to adding or removing concepts
When adjusting your product portfolio, it is important to understand how sensitive your overall portfolio is to adding or removing specific SKUs. The and functions help you quickly determine how the removal / inclusion of specific concepts will lead to a subsequent change in preference share, revenue, and profit for your overall portfolio.
Checking your portfolio’s sensitivity when removing concepts
It is vital to understand the impact removing each concept will have on your overall portfolio. To illustrate this process, let’s look at the example of optimising BrandCo’s portfolio of soft drinks.
BrandCo currently offers four different soft drinks, which compete with another six SKUs from competitors. Currently, BrandCo represents 32.8% of the market.
BrandCo wants to investigate the impact of removing one of their current products while continuing to maximise preference share and revenue. This can easily be done through the function, as follows:
Step 1: Open advanced settings.
Navigate to the simulation tab that you wish to test. In the bottom right corner of the simulator, select the checkbox.
Step 2: Specify the concepts under Checking sensitivity to removal of concepts
- Scroll down for the tab.
- Click on the tab to open a drop-down menu consisting of existing product concepts.
- Select the concepts you want to test removing from your portfolio.
- Click on the button.
Step 3: The output
A new simulation is now generated with added scenarios for each removal of the specified concepts.
For BrandCo’s baseline scenario, their four SKUs comprised 32.8% preference share and revenue index projection of $819.
When removing Banana, we see the lowest decrease in preference share (1.8%) and revenue ($47). We see the largest change, 8.6% and $215 drop in BrandCo’s overall preference share and revenue projections when removing Orange.
Checking your portfolio’s sensitivity when adding individual concepts
Similar to removing concepts, it is also essential to evaluate the impact of adding new concepts to your product portfolio.
BrandCo currently has four SKUs and is preparing to launch an NPD to strengthen its market position further. With three new product concepts in the proposal, it intends to identify the NPD that will maximise its new portfolio’s preference share, revenue, and profit.
This can be easily done with the function as follows:
Step 1: Open the advanced settings.
Navigate to the simulation tab that you wish to test. In the bottom right corner of the simulator, select the checkbox.
Step 2: Specify the concepts under Checking sensitivity to inclusion of only one concept
- Scroll down for the tab.
- Click on the tab to open a drop-down menu consisting of existing product concepts.
- Select the concepts you want to test adding to your portfolio.
- Click on the button.
Step 3: The output
A new scenario will be generated with added scenarios for each addition of the specified concepts.
In this example, BrandCo intends to launch one out of the three NPDs. Hence, BrandCo Lemon is the best concept to add as the overall preference share would be 38%, the highest compared to 36.8% of Kiwi and 36.4% of Apple.