Plan Environment Wargaming
Wargaming potential environments is an essential step in the decision-making process for most users. It helps establish the outer bounds of potential performance outcomes, provide perspective on the relative weight of each environment factor, and sets expectations with leadership.
Wargaming Best Practices
This exercise typically focuses on trended factors (such as Distribution and Price), as these have greater year-over-year variability than seasonality markers and holidays.
It’s useful to establish three comparison points: a base-case, best-case, and worst-case.
Setting Upper and Lower Bounds
Keen’s automatic trend data is typically an excellent jumping-off point for the baseline case. In certain situations, though, it may be more appropriate to:
match year-over-year activity exactly, to produce a net zero effect driven by the environment, or
carry forward the last value from the string of actualized data, which will have either a positive or negative YOY impact depending on how this final figure compares to the average for the plan period.
Once the baseline case has been established, you can more confidently define a best- and worst-case bound, based on either a percentage change or a projected volumetric change. Reach informed consensus by partnering with colleagues in Finance and Demand Planning.
Contextualizing “Best” and “Worst”
It's important to consider the relationship between a factor and your sales outcome when discussing what a best or worst case may look like.
For example, there may be an inverse relationship between the price of your product and sales. If so, an increase in price would be expected to drive a decline in sales, so the "best case” would be a decrease in price during the plan period.
Conversely, there’s likely a direct relationship between the distribution of your product and sales. An increase in distribution would be expected to drive an increase in sales, so the "best case” would be an increase in distribution during the plan.
Be conscious about labeling alternatives accurately given these relationships.
Pro tip: You can sanity-check the direction and weight of each factor’s relationship to Sales in the Factor Statistics panel of your model.
Applying Edits
Use the “Edit Environment Data” button to edit factor activity in bulk - see details here.
Percentage change: If you anticipate a 10% increase in Distribution in the best case or a 15% decline in Distribution in the worst case, apply these percentages to the base-case activity.
Volumetric change: Conversely, your team may have working projections that Distribution will drive +1.5M Unit Sales vs. the Prior Year. You’ll have to work backward from the base case to produce activity that translates to this outcome.
In the absence of reliable intel, we recommend a (+/-) 5% change as the starting point to initiate a discussion.
Don’t forget: The anticipated timing of environment changes goes hand-in-hand with context on the magnitude of a change.
Example: If a pricing action is planned, but will only take effect halfway through the Plan period, make sure this is reflected in the activity.
Visualizing Differences & Quantifying Impact
You can review the activity assumptions for each Plan in our Compare Plans Report, or by adding the Environment Factors panel to any existing report:
Pairing this panel with insights from the Total Performance panel reveals that the same marketing investment can drive very different top-line sales volume and responsiveness to marketing, if the environment factor is heavily impactful to the brand.
In the below example, a 10% increase in price is projected to drive 7M fewer sales than in the base case, while a 15% decrease in the product’s average price would drive 14M additional sales:
Uncovering and sharing these insights with your leadership team helps establish the importance of the environment in the overall plan profitability and brand performance.