Book a demoScenario & ROI
Handbook
Master the art of scenario planning and ROI optimization. Learn how to model price, feature, and display changes safely to maximize returns while minimizing risk.
Pricing & Feature Levers
Understanding the key variables you can adjust to optimize ROI
Base Price Changes
Direct price adjustments to products
Example:
10% price increase → 15% margin improvement
Key Considerations:
- Competitive response
- Volume impact
- Customer acceptance
Feature Modifications
Changes to product features or packaging
Example:
Larger pack size → 8% unit margin increase
Key Considerations:
- Manufacturing costs
- Consumer preference
- Shelf space
Display Positioning
Changes to in-store display and placement
Example:
Endcap placement → 25% volume lift
Key Considerations:
- Retailer cooperation
- Competition
- Seasonality
Promotion Mechanics
Changes to discount structure and terms
Example:
BOGO → 40% volume increase, 12% margin impact
Key Considerations:
- Retailer margin
- Consumer behavior
- Competitive response
Elasticity Fundamentals
Understanding how demand responds to changes in price and promotion
Price Elasticity
How demand changes with price changes
Formula:
Elasticity = % Change in Quantity / % Change in PriceExample:
If 10% price increase causes 15% volume decrease, elasticity = -1.5
Application:
Use to predict volume impact of price changes
Cross-Price Elasticity
How demand for one product changes with another's price
Formula:
Cross-Elasticity = % Change in Product A Quantity / % Change in Product B PriceExample:
If competitor's 10% price decrease causes 5% volume loss, cross-elasticity = 0.5
Application:
Understand competitive dynamics and substitution effects
Promotion Elasticity
How demand responds to promotional activities
Formula:
Promotion Elasticity = % Change in Volume / % Change in Promotion IntensityExample:
If 20% discount causes 50% volume increase, promotion elasticity = 2.5
Application:
Optimize promotion depth and frequency
What-If Analysis Patterns
Common scenario analysis frameworks for trade promotion decisions
Price Increase Scenario
What happens if we increase prices by 5%?
Inputs:
Outputs:
Decision Rule:
Proceed if margin gain > volume loss
Promotion Depth Scenario
What's the optimal discount level?
Inputs:
Outputs:
Decision Rule:
Choose discount with highest net ROI
Feature Change Scenario
Should we change pack size or features?
Inputs:
Outputs:
Decision Rule:
Proceed if net benefit > implementation cost
Competitive Response Scenario
How will competitors react to our changes?
Inputs:
Outputs:
Decision Rule:
Factor competitive response into strategy
ROI Calculation Examples
Real-world examples of scenario analysis and ROI optimization
Price Optimization
Baseline:
Current: $2.00 price, 100K units, 30% margin
Change:
Increase price to $2.10 (5% increase)
Impact:
Volume drops to 92K units (-8%), margin increases to 35%
ROI Result:
Net revenue increase: $4,400 (+2.2% ROI)
Key Insight:
Price elasticity of -1.6 makes this profitable
Promotion Optimization
Baseline:
Current: 10% discount, 120K units, 20% margin
Change:
Increase discount to 15%
Impact:
Volume increases to 150K units (+25%), margin drops to 15%
ROI Result:
Net revenue increase: $7,500 (+6.25% ROI)
Key Insight:
Promotion elasticity of 2.5 justifies deeper discount
Feature Enhancement
Baseline:
Current: Standard pack, 100K units, 30% margin
Change:
Add premium feature (+$0.20 cost)
Impact:
Volume increases to 110K units (+10%), margin drops to 28%
ROI Result:
Net revenue increase: $2,200 (+2.0% ROI)
Key Insight:
Consumer willingness to pay covers feature cost
Ready to Optimize Your Scenarios?
See how Vector's Scenario Studio can automate your what-if analysis and help you find the optimal promotion parameters.