Monday, January 23, 2012

Duplication - A four part series

Part Four: Duplication among three or even four variables

I’m not a fan of the complex, but there is some value in adding additional variables to the duplication equation.  Sometimes businesses have two or even three direct competitors, or you’ll want to look at duplication in the consumption of multiple products.  I’ve found this level of analysis most helpful in identify each variable’s exclusive or loyal base compared to one another (in size and demo/geo/psychographic analysis).  Identifying the varying levels of duplication across all three or four can provide insight on the market/consumers and can have implications on strategy development. 
Visual demonstrations of three and four-way duplication can become challenging.  For simplicity, I’m going to maintain the use of Venn Diagrams (See Exhibit 10).

Circles in a four-way duplication Venn diagram do not provide the maximum number of combinations of duplication; hence, the use of ovals.  To save myself and you the headache of explaining how each component of the diagrams can be calculated, I’m including a link to an excel document that enables us to complete the calculations.  Note: certain numbers will be needed in order to calculate every separate component making up the Venn diagrams.
Link to duplication calculator (a two-way, three-way, and four-way are included on three separate sheets):
I don’t use these options often, but when the parties have a pull grasp of the concepts and utility, they can be pretty revealing.  I recommend using the two-way method for a while and then proposing a three-way look.  You’ll likely only find a few people with interest in looking at the four-way method.  The number of product/business combinations can be a bit mind boggling.