Too much data and not enough time and resources to leverage it intelligently? Need someone to assist you in decision-making by mining the data you have on your Customers, Products, Employees or Operations? Have an urgent need for sophisticated data analytics? Or just plain data management? Get a 2-pager on us. And contact us .

July 16, 2014

OOMF – Order of Magnitude Forecast

In today’s fast paced business ecosystem, manufacturers are increasingly looking to expand globally and utilize vast opportunities available in emerging and rapidly growing new markets. In this scenario, it becomes extremely important to identify the right markets and the right entry strategy. One of the key factors in developing a robust entry strategy is in understanding the market structure. Market structure analysis helps companies in understanding how various products are positioned, their interactions and in identifying gaps in the marketplace.

Our client, a leading pharmaceutical and CPG manufacturer wanted to establish presence in a new market. We did the market structure analysis to help them understand the competitive landscape and their current position in that environment, and also to identify opportunity areas to enter the new market. This was done by doing an in-depth analysis of historical sales by products, segments, formats, ingredients, price, packaging, distribution, communication, etc. This was overlaid with macro-economic factors, trade regulations, demographic factors and other tactical parameters in forecasting how the structure will change over the years.

The gaps identified were mapped with the company’s products and portfolio strategy to develop various product portfolios to be evaluated for the launch. A simulator was developed to help the manufacturer get an Order of Magnitude estimate of sales for various scenarios of the launch, the sequence of launch, marketing investments required and various other parameters impacting the launch. The client was able to quickly evaluate the opportunity and identify the right portfolio to launch in the market. The market structure analysis and the simulator developed are detailed below.

Market Structure Analysis:
We conducted a Market Structure Analysis to assess the size of prize, right to win and an order of magnitude forecast for a new entrant which helped the manufacturer understand the key value drivers impacting a new market entrant. This understanding helped to simulate various scenarios and develop the best market entry strategy.
Market Structure
Using information from the strategic and tactical launch parameters, the leadership was able to design a launch plan for the product in terms of identifying target markets, target consumers, suggesting the order of entry strategy, establishing the right product positioning and the right marketing mix & distribution. Along with this, the leadership got an idea on the overall product performance in the new market with respect to customers, financials and technology.

Simulating ‘New Market’ entry:
After the holistic analysis of the ‘new market’, we developed a simulator to weigh in different launch strategy options to enter the ‘new market’ in a way that marketing spends were optimized and best returns on investment were derived for the manufacturer entering the ‘new market’. The simulator helped to understand the impact of the newly launched product over the years and estimated the size of prize for the product launched in the ‘new market’.With this simulator, the manufacturer was able to select from a basket of new products; the right product to be launched in the market and the right time to launch the product.

For multiple product launches, this tool helped time the market right and sequenced the launches in an optimal manner in order to maximize returns. The manufacturer was able to visualize the market impact of the product launch by predicting the value share of the new product in the market on an yearly basis for the next ‘x’ years and thus foresee the success/failure of a brand launch in the long term.

Based on the above analysis, we leveraged the simulator to evaluate scenarios and created an optimal portfolio to help build the launch strategy, sequence and time the new product launches in the market in order to uphold the long term financial goals and vision of the manufacturer.

OOMF - Order of Magnitude Forecast Tool
This robust analytical approach helped the company in significantly reducing the risk and fastened the entire launch process. 

More details can be found here.

June 18, 2014

Who are my Social Influencers ?

According to a survey, influencer marketing campaigns drive 16X more engagement than paid or owned media.

Influencer marketing incorporates engaging with specific key individuals that have influence over potential buyers and who can have a significant impact on their purchasing decisions. Reaching potential buyers during their key decision-making processes is one of the great ways to enhance company’s sales with minimal investment. 

These influencers can help generate genuine brand awareness and more importantly persuade others to take action. Influencers with deep social media presence help spread the message to a wider audience.

Our client - a leading publisher of scientific journals - was trying to deal with a rapidly evolving industry. Researchers felt the publisher’s pricing policy was too aggressive and this was hampering dissemination of quality research to a wider audience. The publisher wanted to engage with researchers and thought leaders having influence in the publishing domain to gain insights regarding best practices of the industry, so that they could fine-tune their business model accordingly.

Marketelligent helped the publisher identify key influencers using human analysis and recognition tools. All influencers were ranked based on their digital media footprint and reach among consumers of publishing industry.         

Based on the ranking, top ten influencers were profiled with specific details like Klout Score & # of Twitter followers. Influencer profiling also included connection diagrams which showed linkages of each influencer with organizations or individuals who are authorities in the publishing industry.

The Result:  The academic publishing company engaged with top influencers of the industry to gain great insights regarding business model going forward.  Key enhancements were made:
  • Open access was given to a number of articles in tune with other publishing companies
  • Subscription rates were overhauled to make articles easily available for researchers and scholars
  • Positive reviews in terms of articles and blogs written by these influencers helped the company enhance its brand value
More details can be found here.

May 18, 2014

ModelFlow - An Effective Approach to Managing, Validating and Documenting Predictive Models in Retail Banks

As most modelers, managers and business leaders are fully aware, the growing complexity, usage and regulatory requirements around models and modeling ownership can be a major undertaking in and of itself.   A structured and regular model management, validation and documentation process, both in terms of individual models and a firm’s entire portfolio of models, can effectively be applied across the modeling continuum – from  model creation, to testing, production, optimization and ultimately, model retirement.

The costs of ineffective models and/or modeling processes (from a financial, performance and time perspective) can be prohibitive and material, so by focusing on a regular review, testing and validation process, many firms can gain a multitude of benefits, including better model performance, compliance, efficiency and management effectiveness.

The usage and complexity of models varies across industry, function and company, with perhaps none as complex and regulated as the banking and financial services industry.  However, many applicable lessons and benefits can be leveraged and extended to other industries as well.  Whether it is underwriting, risk management, channel optimization or stress testing, best practices and a consistent approach can lead to better business results and efficiencies.   

One of the core premises is a regular and systematic validation process.  The Office of the Comptroller of the Currency (OCC) has provided the following guidance*: "Banks should conduct a periodic review—at least annually but more frequently if warranted—of each model to determine whether it is working as intended and if the existing validation activities are sufficient. Such a determination could simply affirm previous validation work, suggest updates to previous validation activities, or call for additional validation activities"

In addition, the OCC further states: "An effective validation framework should include three core elements:
  1. Evaluation of conceptual soundness, including developmental evidence
  2. Ongoing monitoring, including process verification and benchmarking
  3. Outcomes analysis, including back-testing"
* Reference:  OCC – Supervisory Guidance on Model Risk Management (April 4, 2011)

As an example, for a client bank (a subsidiary bank of a Fortune 500 US-based insurance and financial services company) Marketelligent undertook a strategic initiative designed to achieve the following dual objectives:
  • Micro-level:  Individual Model - Reviewed, validated and tested an individual predictive model used for collections of their mid-stage delinquencies
  • Macro-level:  Portfolio of Models - Reviewed a large portion of their broader bank model portfolio (50-75 discrete models), ensuring that they are more strategically, consistently and effectively managing their entire modeling function.  Validation, documentation and testing services provided for all models in portfolio
Representative results of Model Validation:

Both the development and validation performance measures were in line and based on the review, the model is still performing well and has good predictive power.

Results/Benefits of Portfolio-Level Review:
  • Portfolio-wide consistency of review, output and documentation developed – templated, repeatable approach going forward.
  • Interconnected models  reviewed and tested more effectively – resulting in confidence that both individual and aggregate models were delivering against desired objectives
  • Goal of achieving up-to-date review and sign-off across the entire portfolio of models achieved.
  • Significant cost efficiencies and economies of scale realized by undertaking the portfolio-wide effort, rather than on a model-by-model basis.
  • As a result of the full review of existing models (and understanding their performance strengths & potential weaknesses), new and refresh model priorities better established.
If you would like to hear more about our ModelFlow framework for Model Development and Validation, and how we may be able to work together, please contact us.