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Having an optimised product range allows you to maximise your customer appeal, by developing and marketing products that drive a larger share of the market or activate more customers. The product range will be optimised to satisfy market needs while reducing costs involved and cannibalisation between SKUs.
Main benefits of optimised portfolio:
When creating your product range, it is important to ensure that it will appeal to the greatest number of consumers. This is not simply choosing the products that each have a high individual reach, but instead finding a portfolio of products that will complement each other in a way to maximise the total reach of the portfolio.
Which product combinations will maximise your reach to the most customers? When there are issues such as limited shelf space, communication space and other budget constraints, it is essential to launch the best combinations to reach the largest number of consumers. It is particularly important for NPDs, as they are yet to develop their customer base.
It is vital to understand which products complement each other best, to reach the maximum market potential. This can be achieved using choice based questions, as it will prevent you from launching similar products for the same group of people and missing out on activating more customers who have a strong preference on other products given the same budget.
When expanding into a new market/sub-market, it is important to know the market potential for your product portfolio. To meet your objective within this category, you can decide the number of products and which of their features will optimise your portfolio. For example, your portfolio may need to cover both a variety of flavours and different sizes to maximise your brand’s market penetration.
It is crucial to keep the number of SKUs in your range efficient, due to the diminishing returns from increased costs. The costs for launching each new SKU include: development, producing, marketing, operating and shelf space.
The incremental potential market reach for every additional SKU with the best combinations (TURF ladder) will show you how many people can be reached by including an additional SKU, as well as the change in revenue. This can help you decide the optimal number of SKUs to include within your product range.
Simulations help companies analyse the market through a competitive context, through creating different possible scenarios. These simulations help to identify the most attractive products / product groups, set the foundation for market-orientated assortment and consistent product range expansion.
Before making any changes to a product range, it is prudent to create a scenario plan, particularly when operating in a competitive environment.
A scenario plan will map out the expected impact of any delisted lines, the expected rate of switching to alternative products, as well as clear sales targets for any new products being introduced. It will also include scenarios regarding updating the entire range, launching new products, removing certain SKUs and so on.
All Natural is a global snacks manufacturer. All Natural wants to start a new range of fruit drinks to complement their current range of snacks.
We do simulation analysis with different price points and different variations of attributes.
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After research and extensive talks with their strategic team, Comforty would like to remove every possible redundant SKU no matter which range it comes from. The SKUs cover different sizes, different functions, different types of shoes for both female and male.
As both shelf spaces are limited at two channels, Comforty would like to know which SKUs to keep without losing much volume share.
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Do you need support in running a pricing or product study? We can help you with agile consumer research and conjoint analysis.
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Conjoint.ly allows you to simulate shares of preference for different market offerings. Specifically, you need to describe offerings that are available on the market in the language of the attributes and levels that you chose to include in the study, and the system will estimate the percentages of preferences for these offerings.
Conjoint.ly Product Variant Selector is a comprehensive methodology for testing up to 300 product ideas that helps you identify the most appealing product variants for your brand or product category. It combines several techniques that our team have developed and refined on full-service projects for FMCG brands.