Sensitivity Analysis

Analysis description:
We ran a one‑way sensitivity analysis on the 80/20 Physical/Virtual mix’s moderate‑conversion rate, which is 0.18% at its base, shifting to ±0.10 %. The resulting curve stays flat with an expected value of about 849 until conversion hits roughly 0.17 % in the X-Axis, reflecting the hybrid’s fixed‑cost drag. Beyond that kink, each incremental plot in conversion drives the expected value sharply upward, reaching nearly 857.8 at 0.28 %. This means that if mid‑funnel performance slips to approximately 0.17%, the hybrid mix struggles to break even, but once conversion clears that threshold, the 80/20 strategy quickly pulls ahead, reinforcing its appeal under stronger engagement scenarios.

We ran the same one‑way sensitivity for the pure‑physical channel’s moderate‑conversion rate, which is 0.15% at its base, moving it ±0.10%. The resulting EV curve sits flat at approximately 850 points until conversions hit roughly 0.16%, reflecting that below that threshold, each additional sale still falls short of covering setup costs. Once conversion is more than 0.16%, the expected value climbs steadily, reaching nearly 857 at the high end (0.28%). This tells us the physical‑only mix requires a larger mid‑funnel lift just to break even, and only meaningful improvements above 0.16% drive real brand‑image gains.

Finally, we ran another test on the 50/50 physical/virtual mix’s moderate‑conversion rate, varying it ±0.10 % around its base conversion of 0.11%. The EV curve sits on a perfectly flat line at about 850 points for the entire range. Here, the mid‑funnel conversion swings simply don’t move beyond the 50/50 offering. It is neither a drop nor a bump in conversion that changes its brand‑image value. Practically speaking, pouring effort into this split won’t pay off: it remains constant, so this mix delivers no incremental expected value from improvements. This is because the 80/20 Physical/ Virtual Mix always outperforms under these circumstances.  Therefore, from our analysis, the 80/20 mix is the better option under strong scenarios.

Analysis Descri
We conducted a two‑way sensitivity sweep across expected visitor traffic and moderate‑conversion rate for the 80/20 hybrid scenario, highlighting our base‑case at 10,000 visitors and 0.18 % conversion. Diamond‑shaped markers show when the pure‑physical strategy wins, and triangle‑shaped markers show where the 80/20 hybrid prevails. Traffic ranges from 7,500 to 12,500 and conversion from 0.08 % to 0.28 %, so we can pinpoint exactly when the hybrid’s additional fixed costs are offset by stronger brand‑lift versus when the simpler physical‑only approach remains optimal.

By mapping these two simultaneously, we move beyond isolated “what‑if” factors and test the real‑world interplay of marketing spend, user experience improvements, and product updates, which drive both traffic and mid‑funnel conversion together. Stakeholders can see precisely which combinations yield the synergy needed for the hybrid’s brand‑image impact to overcome its setup costs, and where that lift simply doesn’t justify the added complexity.

Importantly, our brand‑image impact score is only sensitive to these variables once both traffic and conversion cross the thresholds. In the lower‑left zone, where traffic is higher than 9,500 and conversion is less than 0.16%, EV is flat, meaning brand image barely budges, so the mix is not successful. In the upper‑right, where traffic is greater than 10,500 and conversion is greater than 0.20%, the expected value climbs steeply, reflecting high sensitivity: an increase in visitors and percentage point of conversion delivers outsized brand‑image value. This tells decision makers exactly where to focus their research to maximize confidence in choosing the 80/20 hybrid.