When is less more? An MBC application

1. 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

2. 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

3. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
Fast Food Company
David
Experienced Product Manager

4. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
Fast Food Company
David
Experienced Product Manager
Curly
Fries
are
currently
non-­‐profitable

5. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
Fast Food Company
Philip
Young Product Manager

6. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
Fast Food Company
Philip
Young Product Manager
New
type
of
healthy
fries
for
kids…Easy
Fries

7. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
7
Prune the product line by delisting Curly Fries?
Expand the product line with Easy Fries?
Senior Management: Trade Off in Decision Making

8. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
8
MENU
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. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
9
MENU
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. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
10
MENU
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?
Revenue Index: 100 Profit Index: 100

11. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
11
MENU
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
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

12. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
12
MENU
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
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. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
13
MENU
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

14. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
14
MENU
26.1%
26.5%
21.1%
42.2%
12.7%
30.2%
16.2%
39.6%
13.1%
Increase the price for Curly Fries?
Revenue Index: 100 Profit Index: 100
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
$

15. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
15
MENU
26.1%
26.5%
16.3%
42.2%
9.4%
30.2%
16.2%
39.6%
7.3%
Increase the price for Curly Fries?
Revenue Index: 81 Profit Index: 106
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.19
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

16. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
16
MENU
26.1%
26.5%
16.3%
42.2%
9.4%
30.2%
16.2%
39.6%
7.3%
Increase the price for Curly Fries?
Revenue Index: 81 Profit Index: 106
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.19
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

17. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
17
MENU
26.1%
26.5%
16.3%
42.2%
9.4%
30.2%
16.2%
39.6%
7.3%
Increase the price for Curly Fries?
Revenue Index: 81 Profit Index: 106
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.19
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

18. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
18
MENU
26.1%
26.5%
21.1%
26.3%
10.2%
30.2%
16.2%
39.6%
13.1%
Revenue Index: 100 Profit Index: 100
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
$

19. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
19
MENU
26.1%
26.5%
21.1%
26.3%
10.2%
30.2%
16.2%
39.6%
13.1%
Revenue Index: 100 Profit Index: 100
Include Easy Fries with Curly Fries?
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
$

20. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
20
MENU
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
$
26.1%
26.5%
18.2%
13.2%
8.9%
30.2%
16.2%
39.6%
9.2%
9.6%
Include Easy Fries with Curly Fries?
Revenue Index: 102 Profit Index: 97

21. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
21
MENU
26.1%
26.5%
18.2%
13.2%
8.9%
30.2%
16.2%
39.6%
9.2%
9.6%
Include Easy Fries with Curly Fries?
Revenue Index: 102 Profit Index: 97
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
$

22. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
22
MENU
26.1%
26.5%
18.2%
13.2%
8.9%
30.2%
16.2%
39.6%
9.2%
9.6%
Include Easy Fries with Curly Fries?
Revenue Index: 102 Profit Index: 97
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
$

23. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
23
MENU
26.1%
26.5%
18.2%
13.2%
8.9%
30.2%
16.2%
39.6%
9.2%
9.6%
Revenue Index: 102 Profit Index: 97
Decrease price for Easy Fries?
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
$

24. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
24
MENU
26.1%
38.6%
21.1%
10.3%
10.2%
30.2%
21.3%
39.6%
13.1%
21.1%
Decrease price for Easy Fries?
Revenue Index: 98 Profit Index: 102
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.09
$
Easy
Fries
1.59
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

25. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
25
MENU
26.1%
21.1%
10.3%
10.2%
30.2%
39.6%
13.1%
21.1%
Decrease price for Easy Fries?
Revenue Index: 98 Profit Index: 102
38.6%
21.3%
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.09
$
Easy
Fries
1.59
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

26. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
26
MENU
26.1%
21.1%
10.3%
10.2%
30.2%
39.6%
13.1%
21.1%
Decrease price for Easy Fries?
Revenue Index: 98 Profit Index: 102
38.6%
21.3%
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.09
$
Easy
Fries
1.59
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

27. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
27
MENU
26.1%
21.1%
10.3%
10.2%
30.2%
39.6%
13.1%
21.1%
Revenue Index: 98 Profit Index: 102
38.6%
21.3%
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.09
$
Easy
Fries
1.59
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

28. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
28
MENU
26.1%
21.1%
10.3%
10.2%
30.2%
39.6%
13.1%
21.1%
Revenue Index: 98 Profit Index: 102
38.6%
21.3%
Delist French Fries?
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.09
$
Easy
Fries
1.59
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

29. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
29
MENU
26.1%
26.5%
21.1%
10.2%
30.2%
16.2%
39.6%
13.1%
21.1%
Delist French Fries?
Revenue Index: 72 Profit Index: 84
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
Curly
Fries
2.09
$
Easy
Fries
2.09
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

30. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
30
MENU
26.1%
26.5%
21.1%
10.2%
30.2%
16.2%
39.6%
13.1%
21.1%
Delist French Fries?
Revenue Index: 72 Profit Index: 84
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
Curly
Fries
2.09
$
Easy
Fries
2.09
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

31. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
31
MENU
26.1%
26.5%
21.1%
26.3%
10.2%
30.2%
16.2%
39.6%
13.1%
21.1%
Optimization
Revenue Index: 105 Profit Index: 108
Hamburger
1.19
$
Whooper
2.09
$
Tender
Grill
2.19
$
French
Fries
1.19
$
Curly
Fries
2.19
$
Easy
Fries
1.49
$
Soda
Small
1.19
$
Soda
Large
2.09
$
Mayo
0.19
$
Hickory
1.19
$

32. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
32
David
Experienced Product Manager
“We
have
to
keep
Curly
Fries
in
the
menu
because
of
the
interac*on
with
higher
margin
items
(Tender
grill
and
Hickory
sauce)”

33. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
33
Philip
Young Product Manager
“We
can
introduce
Easy
Fries
without
harming
other
side
dishes
and
increasing
total
sales
and
profits”

34. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
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. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
35
MENU
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. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
36
MENU
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$

37. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
• We can simulate the delisting of an item
catching cross effects
• Optimization of a menu
37
What’s new?

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

39. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
Q & A
Ray Poynter
VCU, Vision Critical
Jeroen Hardon
SKIM
Paulo Cordella
SKIM

40. Jeroen Hardon & Paolo Cordella, SKIM, The Netherlands
NewMR Advances in Quantitative Research Event, 19 September 2012, Session 2
Thank you
Paolo Cordella
Market Research Consultant
p.cordella@skimgroup.com
Jeroen Hardon
Senior Research Consultant
j.hardon@skimgroup.com

41. 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