Demand factor Agents and distributors number
In previous topic, we have already examined how demand varies with change in commission of agents and distributors. In this topic, we will analyze the dependence of demand on change in number of agents and distributors.
Test - Scenario 12C1 - Product 1 (EU)
Effect on demand from number of agents change comes only in next period. There were only few clean tests for representative sample, so chart is based on the most similar reports for EU market. Dependence is power function, decreasing. Almost no influence on demand from competitors in the group, control points lie quite close to the trend line. For Nafta market, dependence of demand on number of agents change is almost identical with data for EU market. Given that the commission of agents and distributors equally affects on demand in EU and Nafta markets, it can be concluded that number of agents and distributors also has the same impact on demand in EU and Nafta markets too. In fact, the only difference between EU and Nafta is the name - “agents” in the EU market and “distributors” in Nafta market, otherwise impact is equal.
In previous version of GMC simulator, effect on demand from change in number of agents and distributors from competitors in the group was significantly higher. The more was the difference in number of agents and distributors between your company and opponents, the greater demand increase you received. For several seasons it was favorite strategy of Asian teams - Swing: in 1 period teams were hiring up to 20 agents in EU market, which then were dismissed in 2 period. Costs increasing for hiring agents and distributors was offset by great increase in demand in 2 and next periods. In new version of GMC simulator, due to changes in calculation of payments to agents (maximum commission and support for previous and current period is used in calculation), possible bonus from swing strategy has come to naught.
"Swing" strategy was specially tested in new version of GMC simulator in 2 control groups on 12C1 scenario. Agents and distributors were hired in 1 period, followed by comparison of demand increase between groups:
With increasing number of agents in EU market from 3 to 14, demand growth in both groups was 43.1%
With increasing number of agents in Nafta market from 4 to 9, demand growth in both groups was 17.6%
Since demand growth was the same in both control groups, despite different number of agents and distributors from competitors in each group, it can be assumed that influence of competitors on demand is absent when there is a change in number of agents and distributors:
Dependence is power function
Effect is equal for EU and Nafta markets
Effect is equal for all products
Cumulative effect is very small