Periodicals portfolio models

[Arne-Helge Byrknes]

A client is interested in simulations of market dynamics of periodicals
(magazines) with a focus on product portfolio where there might be a mix
between new and established products.

1. Any related SD studies out there? (Second best is other products within
fast moving consumer goods.)

2. To what extent would you say that SD (alone or in combination with other
approaches) would be suitable if an objective is to seek optimal resource
allocation distribution among products in a portfolio within the same market
niche?

3. Is it advisable to include endogenous attractiveness variables (design,
layout, format, contents etc.), or might these just as well be exogenous
inputs, possibly as (non-linear, delayed) functions of invested R&D resources?

Regards
Arne-Helge Byrknes
Consultant
Paradigme TNS
From: Arne-Helge Byrknes <arne-by@online.no>

[Alan Graham]

Arne-Helge asks about models of portfolios of (likely interacting)
products of mixed characteristics, and optimizing resourcing for them.

He can find an approach close indeed to his situation described in
Graham and Ariza, "Dynamic, hard and strategic questions: using
optimization to answer a marketing resource allocation question"
System Dynamics Review 19(1), Spring 2003, pp. 27-46.

The model described there represents a portfolio of divers
telecommunications and electronics products; PA Consulting (i.e.,
the successor to Pugh-Roberts Associates) has done similar models
of a portfolio of periodicals and related products; the manner of
use and indeed many of the model structures are similar to the
published study.

The published model repreesents the attractiveness of each product
as an exogenous time series, set by product managers who knew the
likely product developments. A next step would have been to
represent endogenous variation in that course of events, based
(as Arne-Helge suggests) on a delayed version of R&D resourcing,
again based on what company experts believe possible. (Theres
usually a roster of potential projects, with price tags, if not
a formal product line lifecycle plan, and sometimes even conjoint
marketing studies that quantify the attractiveness of various
features.) So the answer to question 4 is "yes".

cheers,

alan


Alan K. Graham, Ph.D.

Decision Science Practice
PA Consulting Group
Alan.Graham@PAConsulting.com
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