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BB-133 Commoditization v05

[Building Blocks] BB-133 Commoditization
Building Blocks (BB-133) - CommoditizationThis Market Simulation workflow follows the Commoditization process. When theProducts in a Market become Commoditized they shift from being differentiated toundifferentiated. At the same time, Market Competition and Pricing shifts fromMonopolistic Competition to Perfect Competition.In this Market, Spacely Sprockets and Cogswell Cogs start out with Products thathave Horizontal Differentiation. That is, while the overall Mean and StandardDeviation (SD) of the Customers Willingness To Pay (WTP) are the same for bothProducts, the way Customers perceive the value of each is uncorrelated. But overtime, Customers view the two Products as being more and more similar, until theProducts become undifferentiated commodities.See also: Building Blocks (BB-132) Orthogonal Optimization Loop Two Inner LoopsEach within the Meta NodesPrice Action / Reaction by Spacely Sprocketsthen Cogswell CogsPrice Experiment = 2.5%Iterations = 5 Outer LoopPrice Action / Reaction by Spacely Sprockets then Cogswell CogsIterations = 10 OptimizeProfit OptimizeProfit Commoditization will take place when the Correlationbetween the two Sprocket Products increases from 0.0(no correlation) to 1.0 (perfect correlation). TheProducts become Commodities when the CustomerDistributions for the two Products are perfectly aligned.At this point, Customers make their purchase decisionbased solely on cheapest Price.InitialMarket ConditionsProductsSpacely SprocketsSet ProfitMaximizing PriceCogswell CogsSet ProfitMaximizing PriceOuter PricingLoop StartOuter PricingLoop EndSort by IterationDescendingGet LastPricesWillingnessTo Pay (WTP)of CustomersCommoditizationCorrelationSelect NextProduct CorrelationSpacely SprocketsCogswell CogsProductCorrelation MatrixFinalMarket ConditionsSelect NextProduct CorrelationTrackProductCorrelationExclude'No Sale'Spacely SprocketsCogswell CogsPriceCostQuantityRevenueProfitTrackCorrelation Simulate Market Table Creator Price Optimize Price Optimize RecursiveLoop Start Recursive Loop End Sorter Row Filter MatrixDistributions CustomerDistributions Chunk Loop Start ConstantValue Column ConstantValue Column CorrelationPairs To Matrix Simulate Market Loop End ConstantValue Column Row Splitter Row Splitter Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Table Rowto Variable Building Blocks (BB-133) - CommoditizationThis Market Simulation workflow follows the Commoditization process. When theProducts in a Market become Commoditized they shift from being differentiated toundifferentiated. At the same time, Market Competition and Pricing shifts fromMonopolistic Competition to Perfect Competition.In this Market, Spacely Sprockets and Cogswell Cogs start out with Products thathave Horizontal Differentiation. That is, while the overall Mean and StandardDeviation (SD) of the Customers Willingness To Pay (WTP) are the same for bothProducts, the way Customers perceive the value of each is uncorrelated. But overtime, Customers view the two Products as being more and more similar, until theProducts become undifferentiated commodities.See also: Building Blocks (BB-132) Orthogonal Optimization Loop Two Inner LoopsEach within the Meta NodesPrice Action / Reaction by Spacely Sprocketsthen Cogswell CogsPrice Experiment = 2.5%Iterations = 5 Outer LoopPrice Action / Reaction by Spacely Sprockets then Cogswell CogsIterations = 10 OptimizeProfit OptimizeProfit Commoditization will take place when the Correlationbetween the two Sprocket Products increases from 0.0(no correlation) to 1.0 (perfect correlation). TheProducts become Commodities when the CustomerDistributions for the two Products are perfectly aligned.At this point, Customers make their purchase decisionbased solely on cheapest Price.InitialMarket ConditionsProductsSpacely SprocketsSet ProfitMaximizing PriceCogswell CogsSet ProfitMaximizing PriceOuter PricingLoop StartOuter PricingLoop EndSort by IterationDescendingGet LastPricesWillingnessTo Pay (WTP)of CustomersCommoditizationCorrelationSelect NextProduct CorrelationSpacely SprocketsCogswell CogsProductCorrelation MatrixFinalMarket ConditionsSelect NextProduct CorrelationTrackProductCorrelationExclude'No Sale'Spacely SprocketsCogswell CogsPriceCostQuantityRevenueProfitTrackCorrelationSimulate Market Table Creator Price Optimize Price Optimize RecursiveLoop Start Recursive Loop End Sorter Row Filter MatrixDistributions CustomerDistributions Chunk Loop Start ConstantValue Column ConstantValue Column CorrelationPairs To Matrix Simulate Market Loop End ConstantValue Column Row Splitter Row Splitter Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Line Chart(JFreeChart) Table Rowto Variable

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Created by: Berlin
Created at: 2018-05-21
On NodePit since: 2021-02-05
Last update: 2024-12-17
Created with KNIME version: v4.3.0

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