Skim advances in quant - 2011

A Presenta*on from The NewMR “Advances in Quan*ta*ve Research” Event

19 September, 2012

Event sponsored by Affinnova All copyright owned by The Future Place and the presenters of the material

For more informa=on about Affinnova visit www.affinnova.com For more informa=on about NewMR events visit newmr.org

When is less more? An MBC applica=on Jeroen Hardon & Paolo Cordella, SKIM

Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2

When less is more?

Paolo Cordella Market Research Consultant

Jeroen Hardon Senior Research Consultant


Fast Food Company

David Experienced Product Manager


Fast Food Company


Curly Fries are currently non-‐profitable


Fast Food Company

Philip Young Product Manager


Fast Food Company


New type of healthy fries for kids…Easy Fries


7

Prune the product line by delisting Curly Fries?

Expand the product line with Easy Fries?

Senior Management: Trade Off in Decision Making


8

MEN

U

Hamburger 1.19 $

Whooper 2.09 $

Tender Grill 2.19 $

French Fries 1.19 $

Curly Fries 2.09 $

Soda Small 1.19 $

Soda Large 2.09 $

Mayo 0.19 $

Hickory 1.19 $

How to optimize the current menu?


9

MEN

U

Hamburger 1.19 $

Whooper 2.09 $

Tender Grill 2.19 $

French Fries 1.19 $

Curly Fries 2.09 $

Soda Small 1.19 $

Soda Large 2.09 $

Mayo 0.19 $

Hickory 1.19 $

26.1%

26.5%

21.1%

42.2%

12.7%

30.2%

16.2%

39.6%

13.1%

Revenue Index: 100 Profit Index: 100


10

MEN

U

Hamburger 1.19 $

Whooper 2.09 $ Tender Grill 2.19 $

French Fries 1.19 $

Curly Fries 2.09 $

Soda Small 1.19 $ Soda Large 2.09 $ Mayo 0.19 $ Hickory 1.19 $

26.1%

26.5%

21.1%

42.2%

12.7%

30.2%

16.2%

39.6%

13.1%

Delist Curly Fries?



11

MEN

U

Hamburger 1.19 $


French Fries 1.19 $


26.1%

26.5%

5.1%

43.1% 30.2%

16.2%

39.6%

2.3%

Delist Curly Fries?



12

MEN

U

Hamburger 1.19 $


French Fries 1.19 $


26.1%

26.5%

5.1%

43.1% 30.2%

16.2%

39.6%

2.3%

Delist Curly Fries?

Revenue Index: 77 Profit Index 83


13

MEN

U

Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.09 $


26.1%

26.5%

21.1%

42.2%

12.7%

30.2%

16.2%

39.6%

13.1%



14

MEN

U

26.1%

26.5%

21.1%

42.2%

12.7%

30.2%

16.2%

39.6%

13.1%

Increase the price for Curly Fries?


Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.09 $



15

MEN

U

26.1%

26.5%

16.3%

42.2%

9.4%

30.2%

16.2%

39.6%

7.3%



Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.19 $



16

MEN

U

26.1%

26.5%

16.3%

42.2%

9.4%

30.2%

16.2%

39.6%

7.3%



Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.19 $



17

MEN

U

26.1%

26.5%

16.3%

42.2%

9.4%

30.2%

16.2%

39.6%

7.3%



Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.19 $



18

MEN

U

26.1%

26.5%

21.1%

26.3%

10.2%

30.2%

16.2%

39.6%

13.1%


Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.09 $



19

MEN

U

26.1%

26.5%

21.1%

26.3%

10.2%

30.2%

16.2%

39.6%

13.1%


Include Easy Fries with Curly Fries?

Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.09 $



20

MEN

U

Hamburger 1.19 $


French Fries 1.19 $

Curly Fries 2.09 $ Easy Fries 2.09 $


26.1%

26.5%

18.2%

13.2%

8.9%

30.2%

16.2%

39.6%

9.2%9.6%




21

MEN

U

26.1%

26.5%

18.2%

13.2%

8.9%

30.2%

16.2%

39.6%

9.2%9.6%



Hamburger 1.19 $


French Fries 1.19 $




22

MEN

U

26.1%

26.5%

18.2%

13.2%

8.9%

30.2%

16.2%

39.6%

9.2%9.6%



Hamburger 1.19 $


French Fries 1.19 $




23

MEN

U

26.1%

26.5%

18.2%

13.2%

8.9%

30.2%

16.2%

39.6%

9.2%9.6%


Decrease price for Easy Fries?

Hamburger 1.19 $


French Fries 1.19 $




24

MEN

U

26.1%

38.6%

21.1%

10.3%

10.2%

30.2%

21.3%

39.6%

13.1%21.1%



Hamburger 1.19 $


French Fries 1.19 $




25

MEN

U

26.1%

21.1%

10.3%

10.2%

30.2%

39.6%

13.1%21.1%



38.6%

21.3%

Hamburger 1.19 $


French Fries 1.19 $




26

MEN

U

26.1%

21.1%

10.3%

10.2%

30.2%

39.6%

13.1%21.1%



38.6%

21.3%

Hamburger 1.19 $


French Fries 1.19 $




27

MEN

U

26.1%

21.1%

10.3%

10.2%

30.2%

39.6%

13.1%21.1%


38.6%

21.3%

Hamburger 1.19 $


French Fries 1.19 $




28

MEN

U

26.1%

21.1%

10.3%

10.2%

30.2%

39.6%

13.1%21.1%


38.6%

21.3%

Delist French Fries?

Hamburger 1.19 $


French Fries 1.19 $




29

MEN

U

26.1%

26.5%

21.1%

10.2%

30.2%

16.2%

39.6%

13.1%21.1%



Hamburger 1.19 $





30

MEN

U

26.1%

26.5%

21.1%

10.2%

30.2%

16.2%

39.6%

13.1%21.1%



Hamburger 1.19 $





31

MEN

U

26.1%

26.5%

21.1%

26.3%

10.2%

30.2%

16.2%

39.6%

13.1%21.1%

Optimization


Hamburger 1.19 $


French Fries 1.19 $




32


“We have to keep Curly Fries in the menu because of the interac*on with higher margin items (Tender grill and Hickory sauce)”


33


“We can introduce Easy Fries without harming other side dishes and increasing total sales and profits”


So what?

We use Menu-Based Conjoint (MBC) to simulate and optimize the menu •  We can mimic realistic consumer choices

•  We can solve trade off in decision making

34


35

MEN

U

Hamburger 1.19 $

Whooper 2.09 $

Tender Grill 2.19 $

French Fries 1.19 $

Curly Fries 2.09 $

Soda Small 1.19$

Soda Large 2.09$

Mayo 0.19$

Hickory 1.19$

MBC Task


36

MEN

U

MBC Task

Hamburger 1.19 $

Whooper 2.09 $

Tender Grill 2.19 $

French Fries 1.19 $

Curly Fries 2.09 $

Easy Fries 2.09 $

Soda Small 1.19$

Soda Large 2.09$

Mayo 0.19$

Hickory 1.19$


•  We can simulate the delisting of an item

catching cross effects

•  Optimization of a menu

37

What’s new?


Thank you


Q & A

Ray Poynter VCU, Vision Critical

Jeroen Hardon SKIM

Paulo Cordella SKIM


Thank you

Paolo Cordella Market Research Consultant [email protected]

Jeroen Hardon Senior Research Consultant [email protected]

A Presenta*on from The NewMR “Advances in Quan*ta*ve Research” Event

19 September, 2012

Event sponsored by Affinnova All copyright owned by The Future Place and the presenters of the material

For more informa=on about Affinnova visit www.affinnova.com For more informa=on about NewMR events visit newmr.org

When is less more? An MBC applica=on Jeroen Hardon & Paolo Cordella, SKIM

Skim advances in quant - 2011

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