Question

Class Management Information Systems: What is the relationship between visualizations and mental models? What is the role of visualization in your work as a Cost and Pricing Analyst? Can you think of ways that some aspects of your job as a Cost and Pricing Analyst could utilize visualizations? If so, can you describe what visualizations would be used?

Answer 1

Visualization & Mental Models:

Visualization:

• Visualization is a technique of creating images, diagrams or animations in order to communicate messages.
• In order to communicate both abstract and concrete ideas, Visualization through visual imagery has been an effective way for a long time.
• In simple words, we can say that Visualization is the technique to deliver or convey a message by pictorial or graphical representation.

Mental Models:

• A mental model is a description of the thought process of an individual, related to the happenings of the real world.
• A mental model is a representation of the real or surrounding world which describes relationships between it's different parts and an individual's intuitive perception about his/her own acts and consequences.
• Mental Models support in shaping behavior and setting an approach in order to solve problems and performing tasks.
• In simple words, a Mental Model is a representation of external reality.

So, by understanding both Visualization and Mental Models, we can conclude relationship between both is that Visualization can be used as a Mental Model in order to communicate a message related to external reality and a Mental Model can be represented as Visualization in order to represent a process or working or a thought process.

Role of Visualization in cost and pricing analysis:

• Visualization is the technique to convey or represent a message or fact or data in pictorial representation.
• From 4 P's of marketing, price is the most important and powerful factor that can transform an organization's revenues & profits.
• Role of a cost and pricing analyst is to keep a tab on the variations and data related to cost & price of a product and communicate these variations and data visually for better understanding before management.
• In a meeting, the best and effective way to start a discussion on cost and price is to visually display cost and pricing analytics.
• Cost and pricing analysts use Visualization to display these analytics because pictorial representation is more effective and understanding than textual representation.

Yes, Visualizations can be used. As a cost and pricing analyst, following are the aspects for which visualizations can be utilized:

• To support portfolio and channel strategy development.
• To take emotions out of pricing decisions that means to make pricing decisions more understanding in order to make them effective.
• To focus on strategic decisions in a discussion.
• To display data related to cost and pricing of a product in a better way.
• To make discussions more interesting and meaningful for the participants.
• Visualizations can be used effectively in order to forecast pricing and cost variations related to cost and pricing of a product.
• Visualizing pricing is an important step as a part of strategic decision making related tasks.

So, these are some aspects where Visualizations can be used by a cost and pricing analyst.

As a cost and pricing analyst, following visualizations can be used as visual tools in order to visualize prices:

1) Price Waterfall

• The price waterfall represents the potential problems occurance with profit leakage.
• Price waterfall as a visualization tool is a simple chart form, and sometimes it can be difficult to calculate some of the costs especially trade costs and translate them to costs for an average unit.

2) Discount Curve

• How much consumers want to pay on an equalised basis? For this, an analyst would consider price per pound, ounce, gallon, dozen or other volume measure for all the products in a portfolio.
• Ideally, consumers receive a consistent value across sizes in the portfolio with a discount as the volume in each package increases.
• An analyst and company would want to see a smooth or smooth-ish line sloping from the high index to the low index.

3) Candlesticks

• Candlesticks as a visualization tool, support an analyst to visualize the spread between the different types of prices seen in retail outlets - spanning from MSRP to the promoted price.

So, this is the description of visualizations to be used for pricing.

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