Typical Questions for Market Simulators

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There are many marketing strategies that can be investigated with the market simulator.  Here are three of the most common:


1.  Given a current competitive environment, what product should I offer to maximize interest in my offering?  How can I modify an existing product to capture more relative demand?  A market simulator lets you input multiple products and place them in simulated competition one with another.  Each product is defined using the attribute levels measured in the conjoint study (brands, colors, prices, speeds, warranties, etc.).  Therefore, if you have measured the relevant brands and features offered in the market, you can simulate a realistic market scenario within the choice simulator.  Within that market scenario, you can add a new product and see how well it competes.  If the goal is to maximize share, offering the best features at the lowest price is often the trivial solution.  The choice simulator focuses on the demand side of the marketing equation; but it is also important to pay attention to the supply side and take the costs of producing different products/services into consideration.  If you have cost information available to you, the choice simulator permits you to investigate the incremental benefits of different features of a product relative to the cost of offering them.  


2.  What is the relative price sensitivity of different brands?  If I raise my price by 10%, how will it affect my brand?  How will it affect competitors' brands?  You can conduct "sensitivity analysis" for attributes such as price using the choice simulator to generate relative demand curves.  The approach involves holding all other brands at a constant price and changing the price of a single brand, recording the relative share at each point for that brand along the price continuum.  If your conjoint data reflect respondent differences (all models offered by Sawtooth Software except for aggregate CBC logit), differential cross-elasticities can be investigated through this approach.


3.  What portfolio of products can I offer to appeal to different market segments and maximize overall share? The choice simulator lets you merge additional segmentation variables (such as cluster membership, demographics or firmographics) with your conjoint part-worths.  If you have segmentation information, you can investigate product formulations that appeal to different groups of respondents.  It is likely that by designing products that appeal uniquely to targetable segments that you can increase overall share for your product line or occupy a niche that is not currently being served.


These three strategic questions and the simulation strategies for responding to them are illustrated later within this documentation.


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