|Forecasting Prices for New Products and Markets
The very life of a new product -- and even a company -- too often depends on an accurate earnings projection. When there is a track record, there is comfort in the wealth of data and experience to plumb.
But, what about revenue estimates for a new offering -- one without a history, or where multiple competitors are involved? A new technology? A penetration strategy?
In that situation, the business model often degenerates into a blind guess of substitute price stability, "take rates," "market penetration," extrapolating trials, and somebody's WAG about advertising's effects.
And, too too often, multimillion dollar business plans hinge on all of that, plus whether that Kid-MBA with the 10 Mb spreadsheet model didn't make a mistake in his cell linkages while guessing right about your penetration.
If he didn't screw up -- and guessed right, you're a hero. Otherwise, you're toast along with those who cast their lot with you. And, of course, all the millions your company staked on that guess.
Don't worry about the Kid-MBA, though -- after blowing up your business with his convoluted spreadsheet, he's probably gone on to sweet-talk some uberbucked, outta-touch, over-the-hill investment banker into thinking he's the latest Techno-Wunderkind. Now, he and his B-School buds got $20 extra long playdough for yet-another ultimate eCommerce website/engine. Oh, and that first round of financing also covers that BMW Gen-Xer is roaring out of your lot with.
Did we mention he's the CoverBoy for this month's Wired?
It doesn't have to be that way -- your business plan, not Kid-MBA, that is.
In recent years, industry characteristics have been shown to provide a firm statistical basis for mathematically modeling price trajectories. What's more, these trajectories can be associated with specific competitive scenarios and their attributes.
In other words, rather than guessing prices and market penetration, trajectories can be calculated by scenario -- or clusters of scenarios.
No more guessing at what will happen. Or, betting people's livelihoods on some spreadsheet.
Why Run One Scenario When a Thousand Will Do?
From our perspective here at Devonrue, we've always had a sweet spot for things done in overwhelming quantities. Why use a swatter when a cannon will do?
And, why run one scenario when a thousand will do?
If price/penetration can be calculated for 1 scenario, or a handful, why stop there? Just because your spreadsheet can only handle one scenario at at time? Or, maybe only run a few variants?
Hey, that sort of technology was cutting edge when VisiCalc was around. (Please tell us you Have heard of VisiCalc).
With today's processing power -- and our object technology, of course -- you can run a hundred, a thousand, or more competitive scenarios -- essentially every possible combination of events your executive team can think of -- each weighted by probability and associated with market and competitor features, to develop a price/penetration curve or "space" for your investment.
Bundle in some of our favorite data mining objets, and you can mine along dimensions and fault lines to your heart's content.
How about for the attributes of successful roll-out scenarios?
Or, what your business plan must be able to do in order actually clear the hurdle rates?
Or to isolate those market segments critical to your success so you can targets those sensitivities and not waste time on low rent stuff?
Or, identify competitor counter-moves likely to inflict the most damage on your business plan? And, know exactly what to do about it well in advance.
In short, with some serious mathematical technology -- ours if we must remind you, you can plan your business, rather than merely react to events.
When hundreds of millions of dollars are at stake, how can you afford not to control your destiny?
MarketSimulator? -- A System For Modeling Markets
MarketSimulator? is a desktop environment for modeling competitive market scenarios. MarketSimulator? combines proven, system dynamics-based, non-linear forecasting methods with a highly segmented, geographically based marketing database and data mining tools.
All on a desktop. And, all at a price your business can afford. You probably spend more to a headhunter to hire that Kid-MBA than you will ever need to invest in our technology.
Price trajectories are computed for each product, by competitor and segment, in a multi-year scenario. Alternatively, prices can be consolidated across common scenario and segment classes and associated with leading indicators or market penetration or position erosion. With MarketSimulator?, analysts can value the investment across a wide range of scenarios, calculate the impact of emerging technology and changing customer preferences, and optimize capital performance in a multi-competitor environment.
MarketSimulator? employs good ole' (sorry, couldn't resist the pun) American Microsoft ｮ COM+ object technology, permitting graceful integration with existing database and application suites. Rather than having to learn an entirely new system or disposecurrent tools, MarketSimulator? complements your current tools models and systems to enhance and extend their current capabilities.
What's more, MarketSimulator? can be tailored to meet specific needs and requirements of specific markets, investment projects, and analyst specifications. MarketSimulator? has been adapted to a wide range of industries and offerings, including electric power, telecommunications (broadband, wireline, and wireless), smartcards, bandwidth, chemicals, oil, and natural gas segments. There is no market out of reach -- and no opportunity that can slip by.
If market analysis and business development is your profession, the stakes are large, and data simply does not exist, or you are a system vendor looking to enhance your desktop solutions, talk to us about yourrequirements.
And, if you're one of those eCommerce Kid Entrepreneur wanna-bes, sorry, we won't bank-roll your BMW.
But we will help you put aside those spreadsheet toys -- and show you how to do this sort of stuff right.