WEBVTT NOTE IDER in-house training materials. Captions follow measured phrase audio timings. Hypothetical worked cases; figures are instructional examples. 00:00:00.000 --> 00:00:05.956 Imagine you advise a cold-chain operator considering a new city. Management wants a market size, but a large 00:00:05.956 --> 00:00:09.265 market does not tell us whether this operator should enter. 00:00:09.385 --> 00:00:16.951 We need a decision with alternatives, a time horizon, and a loss the organisation can tolerate. Throughout 00:00:16.951 --> 00:00:22.736 this clinic, every number describes a hypothetical training case, not current market statistics. 00:00:22.856 --> 00:00:28.127 Our alternatives are immediate launch, a limited pilot, and deferral. 00:00:28.247 --> 00:00:34.600 Notice that the research question changes when a pilot is available: we ask which uncertainty could reverse 00:00:34.600 --> 00:00:40.205 the decision and how cheaply we can reduce it. Keep a calculation sheet beside you. 00:00:40.325 --> 00:00:45.039 By the end, you will build a defensible recommendation rather than a persuasive market story. 00:00:45.709 --> 00:00:52.848 Start a decision contract with the person who can approve entry. Specify the city, customer segment, 00:00:52.848 --> 00:00:59.095 service standard, and first operating year. Then agree gates before anyone sees favourable results. 00:00:59.215 --> 00:01:05.318 For example, paid orders must cover monthly operating costs, available capacity must meet the promised 00:01:05.318 --> 00:01:08.573 service, and cash must fund the collection cycle. 00:01:08.693 --> 00:01:16.642 A gate is useful only when its definition is testable. Saying demand must be strong leaves room for 00:01:16.642 --> 00:01:20.616 interpretation; specifying a contribution threshold establishes a measurable requirement. 00:01:20.736 --> 00:01:26.863 Record which evidence could support, weaken, or overturn each gate. This prevents the familiar problem 00:01:26.863 --> 00:01:29.723 of changing success criteria after the fieldwork. 00:01:29.843 --> 00:01:35.253 The contract should also name who resolves conflicting commercial and operational evidence. 00:01:35.923 --> 00:01:42.101 Take eight hundred firms that genuinely need the service. Sixty percent are reachable through the 00:01:42.101 --> 00:01:45.397 proposed sales route, leaving four hundred and eighty. 00:01:45.517 --> 00:01:51.856 If one quarter of those firms adopt and each places four monthly orders, potential demand is four hundred 00:01:51.856 --> 00:01:52.912 and eighty orders. 00:01:53.032 --> 00:02:00.294 These percentages are conditional: adoption applies to reachable firms, not to every firm in the city. That 00:02:00.294 --> 00:02:03.284 distinction prevents double counting and unjustified optimism. 00:02:03.404 --> 00:02:09.649 Give each assumption a source, observation date, and plausible range. A company registry may establish 00:02:09.649 --> 00:02:15.062 eligibility only after checking activity and product fit. Interview interest cannot establish paid 00:02:15.062 --> 00:02:15.478 adoption. 00:02:15.598 --> 00:02:21.268 Trace the funnel backwards when a manager challenges the result; you should be able to identify the 00:02:21.268 --> 00:02:22.936 specific assumption that drives disagreement. 00:02:23.606 --> 00:02:29.294 Design evidence collection around the funnel rather than one general questionnaire. Verify eligibility 00:02:29.294 --> 00:02:34.982 against actual temperature-sensitive shipments. For reach, test whether sales staff can contact decision 00:02:34.982 --> 00:02:37.607 makers at the proposed acquisition cost. 00:02:37.727 --> 00:02:43.880 For adoption, ask customers to make a real commitment under clearly explained service and price terms. 00:02:43.880 --> 00:02:49.649 Separate first purchase from repeat use, because a launch promotion can produce trial without durable 00:02:49.649 --> 00:02:50.034 demand. 00:02:50.154 --> 00:02:57.090 Sample across firm size, route and current supplier, including businesses outside management's existing 00:02:57.090 --> 00:03:02.960 network. A convenient sample of enthusiastic contacts usually overstates accessible demand. 00:03:03.080 --> 00:03:09.691 Keep refusal and nonresponse records so the reader can assess selection. Interview explanations help reveal 00:03:09.691 --> 00:03:15.421 mechanisms, but do not convert a compelling quotation into a numerical population estimate. 00:03:16.091 --> 00:03:19.249 Now turn market evidence into operating economics. 00:03:19.369 --> 00:03:26.798 Our hypothetical price is three hundred cedis and the incremental cost per order is one hundred and eighty, 00:03:26.798 --> 00:03:31.339 so each order contributes one hundred and twenty toward fixed costs. 00:03:31.459 --> 00:03:36.812 Divide monthly fixed costs of forty-eight thousand by that contribution: operating break-even is four 00:03:36.812 --> 00:03:37.577 hundred orders. 00:03:37.697 --> 00:03:44.550 The denominator must include costs that actually change with an extra order, such as route labour, fuel 00:03:44.550 --> 00:03:50.596 and packaging. If overtime begins above a capacity threshold, one constant variable cost will mislead. 00:03:50.716 --> 00:03:57.074 This calculation also excludes initial investment, financing and tax. A positive operating surplus 00:03:57.074 --> 00:04:03.921 therefore does not establish an acceptable investment return. State that boundary explicitly before using 00:04:03.921 --> 00:04:06.366 break-even as an entry gate. 00:04:07.036 --> 00:04:13.400 Demand is not delivered volume. Suppose the operation can reliably complete only four hundred and twenty 00:04:13.400 --> 00:04:16.185 monthly orders at the promised service standard. 00:04:16.305 --> 00:04:23.093 Revenue is then four hundred and twenty times three hundred, or one hundred and twenty-six thousand cedis, 00:04:23.093 --> 00:04:25.488 rather than the unconstrained demand forecast. 00:04:25.608 --> 00:04:31.344 Calculate capacity at the bottleneck: refrigerated vehicle hours, loading slots, or storage throughput. 00:04:31.344 --> 00:04:38.844 Average capacity can conceal peak-day failure, so test the order pattern as well as the monthly total. 00:04:38.964 --> 00:04:45.703 Rejecting sixty orders may also affect customer retention and future sales. Expansion might remove the 00:04:45.703 --> 00:04:49.297 bottleneck, but it introduces capital and staffing costs. 00:04:49.417 --> 00:04:56.182 Put those costs into a separate option instead of quietly assuming capacity grows for free when demand 00:04:56.182 --> 00:04:56.580 increases. 00:04:57.250 --> 00:05:03.458 Pause the video and change adoption from twenty-five percent to twenty percent. Keep every other assumption 00:05:03.458 --> 00:05:09.278 unchanged: eight hundred eligible firms, sixty percent reach, and four orders per adopter each month. 00:05:09.398 --> 00:05:15.957 First calculate potential orders. Next compare that result with the capacity limit of four hundred and 00:05:15.957 --> 00:05:21.286 twenty, because revenue uses the lower number. Finally calculate contribution less fixed costs. 00:05:21.406 --> 00:05:26.805 Write one sentence identifying whether demand or capacity now constrains performance. 00:05:26.925 --> 00:05:32.863 Do not simply reduce the earlier surplus by five percent; the adoption change is five percentage 00:05:32.863 --> 00:05:38.059 points, and the relationship passes through both the demand funnel and a capacity ceiling. 00:05:38.179 --> 00:05:43.830 Show the intermediate calculations so another analyst could reproduce your result without asking which 00:05:43.830 --> 00:05:45.041 figures you changed. 00:05:45.711 --> 00:05:52.912 The revised funnel produces three hundred and eighty-four orders. That is below capacity, so all 00:05:52.912 --> 00:05:55.312 forecast demand can be served. 00:05:55.432 --> 00:06:01.876 Multiply by one hundred and twenty cedis contribution and you obtain forty-six thousand and eighty. After 00:06:01.876 --> 00:06:08.319 forty-eight thousand fixed costs, the operation loses one thousand nine hundred and twenty cedis per month. 00:06:08.439 --> 00:06:15.791 The important lesson is not the arithmetic alone. A five percentage point change in adoption moves the 00:06:15.791 --> 00:06:20.548 business from capacity constrained to demand constrained and crosses operating break-even. 00:06:20.668 --> 00:06:27.061 That makes paid adoption a priority research variable. It does not mean every other uncertainty can be 00:06:27.061 --> 00:06:27.437 ignored. 00:06:27.557 --> 00:06:33.468 If delivery reliability affects repeat adoption, demand and operational performance are linked, and the 00:06:33.468 --> 00:06:35.579 pilot must observe both together. 00:06:36.249 --> 00:06:42.105 Consider the capacity-limited base case with monthly billed revenue of one hundred and twenty-six thousand 00:06:42.105 --> 00:06:42.496 cedis. 00:06:42.616 --> 00:06:48.134 Under a simplified steady billing assumption, an additional thirty days before collection ties up 00:06:48.134 --> 00:06:51.288 approximately one extra month of revenue in receivables. 00:06:51.408 --> 00:06:56.873 That is another one hundred and twenty-six thousand cedis of funding, even if reported operating profit 00:06:56.873 --> 00:06:57.898 does not change. 00:06:58.018 --> 00:07:04.526 Build a monthly cash schedule including customer deposits, supplier terms, payroll, taxes and opening 00:07:04.526 --> 00:07:10.569 inventory. The receivables shortcut is a screening calculation, not a complete liquidity forecast. 00:07:10.689 --> 00:07:15.925 Seasonal sales and uneven payment dates can create a much larger peak requirement. 00:07:16.045 --> 00:07:22.165 Entry should be conditional on funding that peak, with room for delayed collections, rather than on an annual 00:07:22.165 --> 00:07:23.185 profit estimate alone. 00:07:23.855 --> 00:07:27.686 A useful sensitivity analysis locates switching points. 00:07:27.806 --> 00:07:34.223 Holding reach and order frequency constant, break-even adoption is four hundred divided by eight hundred 00:07:34.223 --> 00:07:38.928 times sixty percent times four: approximately twenty point eight three percent. 00:07:39.048 --> 00:07:44.476 This tells the research team what precision matters. Distinguishing twenty-one from twenty-five percent may 00:07:44.476 --> 00:07:47.965 matter more than measuring the total city population perfectly. 00:07:48.085 --> 00:07:54.507 Then test coherent joint scenarios: weaker adoption could coincide with higher acquisition costs or slower 00:07:54.507 --> 00:07:58.789 collections. Changing one assumption at a time misses these interactions. 00:07:58.909 --> 00:08:05.050 Avoid assigning independent random distributions simply because a spreadsheet can simulate them. Use 00:08:05.050 --> 00:08:07.884 observed relationships or clearly labelled scenarios. 00:08:08.004 --> 00:08:14.007 Report which uncertainties can be reduced with evidence and which remain commercial risks even after 00:08:14.007 --> 00:08:14.807 careful research. 00:08:15.477 --> 00:08:21.665 A pilot should test the mechanism most capable of changing the entry decision. Recruit across the 00:08:21.665 --> 00:08:27.080 intended customer segments, offer the planned commercial terms, and track both first orders and 00:08:27.080 --> 00:08:27.853 repeat orders. 00:08:27.973 --> 00:08:33.755 Record acquisition effort, cancellations, delivery failures and collections using linked customer 00:08:33.755 --> 00:08:41.638 identifiers. Set the observation period long enough to reveal repeat behaviour, not just launch excitement. 00:08:41.758 --> 00:08:47.157 Before starting, define expansion, revision and stopping rules using contribution and service 00:08:47.157 --> 00:08:54.355 performance. A small pilot may use unusually attentive staff or spare vehicles; those conditions can make 00:08:54.355 --> 00:08:56.155 results difficult to scale. 00:08:56.275 --> 00:09:03.785 Document resources per order and recreate the proposed operating model where feasible. The pilot is valuable 00:09:03.785 --> 00:09:09.417 because it resolves a decision, not because activity alone demonstrates market interest. 00:09:10.087 --> 00:09:16.240 We can formalise whether more research is worth buying. Consider a separate simplified decision with 00:09:16.240 --> 00:09:17.471 two possible states. 00:09:17.591 --> 00:09:24.413 Launch earns two hundred thousand cedis in the favourable state, with probability sixty percent, and 00:09:24.413 --> 00:09:28.052 loses one hundred thousand otherwise. Deferral pays zero. 00:09:28.172 --> 00:09:33.995 Without further information, the expected payoff from launch is eighty thousand: one hundred and twenty 00:09:33.995 --> 00:09:37.878 thousand of probability-weighted gain less forty thousand of probability-weighted loss. 00:09:37.998 --> 00:09:43.724 This is a risk-neutral calculation using hypothetical probabilities and comparable payoffs. A 00:09:43.724 --> 00:09:49.928 cash-constrained organisation may rationally reject that choice because the loss threatens survival. Keep 00:09:49.928 --> 00:09:51.837 the decision rule explicit. 00:09:51.957 --> 00:09:58.798 Information value also depends on whether management can actually act on the finding before contracts, 00:09:58.798 --> 00:10:01.535 leases or other commitments become irreversible. 00:10:02.205 --> 00:10:08.295 Pause here and imagine a test that reveals the true state perfectly before management decides. In the 00:10:08.295 --> 00:10:12.236 favourable state, management can launch and earn two hundred thousand cedis. 00:10:12.356 --> 00:10:18.696 In the unfavourable state, it can defer and avoid the hundred thousand loss. Calculate the expected payoff 00:10:18.696 --> 00:10:21.679 when the decision can depend on that information. 00:10:21.799 --> 00:10:27.900 Then subtract the best expected payoff available without the test, which you calculated on the previous 00:10:27.900 --> 00:10:31.714 slide. The difference is the expected value of perfect information. 00:10:31.834 --> 00:10:38.014 Explain why that figure cannot automatically become the budget for a real customer survey. Real studies 00:10:38.014 --> 00:10:41.876 make mistakes, take time, and may not address every uncertainty. 00:10:41.996 --> 00:10:46.455 Write your explanation alongside the numerical answer before moving to the solution. 00:10:47.125 --> 00:10:52.504 With perfect information, launch occurs only in the favourable state. Sixty percent times two hundred 00:10:52.504 --> 00:10:56.807 thousand gives an expected payoff of one hundred and twenty thousand cedis. 00:10:56.927 --> 00:11:02.663 Subtract the current best expected payoff of eighty thousand and perfect information is worth forty 00:11:02.663 --> 00:11:03.046 thousand. 00:11:03.166 --> 00:11:08.775 A real study will usually be worth less because its signal is imperfect, and waiting can reduce 00:11:08.775 --> 00:11:09.435 opportunity value. 00:11:09.555 --> 00:11:16.286 This is an upper bound under the stated probabilities, payoffs and risk-neutral rule, not a suggested 00:11:16.286 --> 00:11:16.707 invoice. 00:11:16.827 --> 00:11:24.548 To assess a real pilot, estimate how often each result occurs, how it updates beliefs, and which action 00:11:24.548 --> 00:11:24.977 follows. 00:11:25.097 --> 00:11:31.590 Research that produces interesting detail without changing the action may have little decision value 00:11:31.590 --> 00:11:33.445 despite excellent technical execution. 00:11:34.115 --> 00:11:39.521 Your final memorandum should fit the decision rather than reproduce every research activity. State the 00:11:39.521 --> 00:11:42.764 recommended option and the conditions that would change it. 00:11:42.884 --> 00:11:49.335 Show the demand funnel, constrained volume, contribution, cash requirement and critical switching 00:11:49.335 --> 00:11:55.249 points. Link each important assumption to its evidence, date and limitation. 00:11:55.369 --> 00:12:01.220 Distinguish measured facts, modelling choices and management judgements so a reviewer knows where 00:12:01.220 --> 00:12:07.971 disagreement belongs. Include a short adverse case and explain the operational response, not merely the 00:12:07.971 --> 00:12:08.871 financial result. 00:12:08.991 --> 00:12:15.415 Assign an owner to every unresolved gate and a date for review. Avoid writing that the market is 00:12:15.415 --> 00:12:18.627 attractive when the evidence supports only a limited pilot. 00:12:18.747 --> 00:12:23.357 The recommendation should be no stronger than the weakest essential condition supporting it. 00:12:24.027 --> 00:12:29.958 Apply this method to one market study you already use. Replace the headline market size with a customer 00:12:29.958 --> 00:12:32.595 funnel whose units and conditional rates are explicit. 00:12:32.715 --> 00:12:38.572 Recalculate attainable volume after capacity, then test contribution and peak cash needs. Identify the 00:12:38.572 --> 00:12:44.429 assumption nearest its switching point and propose a feasible observation that could improve it. 00:12:44.549 --> 00:12:50.435 For a junior practitioner, the immediate discipline is reproducible calculation and a clear evidence trail. 00:12:50.555 --> 00:12:56.345 For a senior practitioner, the harder judgement is deciding which uncertainty deserves resources and 00:12:56.345 --> 00:13:02.549 which must be accepted or transferred. Complete the questions and applied tasks below the video. 00:13:02.669 --> 00:13:09.119 A strong answer explains the decision consequence of each calculation and acknowledges the limits of the 00:13:09.119 --> 00:13:11.539 evidence, rather than reporting numbers alone.