Shapley Value Versus TURF for Product Line Optimization

Total unduplicated reach and frequency (TURF) is one of the most popular analytical techniques employed to optimize product lines. Reach, the measure usually optimized, is typically defined as the proportion of respondents who find at least one favorable item in the product line. The main criticism of TURF is that it can generate optimal product lines with nearly identical reach.

Some researchers have suggested that Shapley Value (SV) analysis replace TURF as the solution to product line optimization issues. Essentially, SV analysis achieves better differentiation than TURF by using a measure different than reach -- the SV score. The SV calculation is based on reach, the same measure used by TURF, but does not compute the value of a product line. Instead, SV analysis computes the value of each item in a product line. The items with the largest SV scores generate the optimal product line.

However, Shapley Value analysis should be considered an alternative method to TURF, not a replacement. There are certain business situations where SV analysis will provide the better solution and certain situations where TURF will provide the better solution.

So, when should SV be applied to solve line optimization issues and when should marketers rely on TURF? In general, SV analysis should be used instead of TURF when:

1. The number of items to be included in the final lineup is unclear. For example, you may have 20 candidate products under development and not know which ones will successfully make their way out of the pipeline. SV analysis provides a solution that takes into consideration all uncertainties and also provides guidelines as to which items should receive the greatest R&D efforts. In this case, SV is a more appropriate analytical tool than TURF. However, when the number of items in the final line is known in advance (find a four-item line maximizing its reach), SV analysis incorporates a lot of uncertainties and may be misleading; in this case, TURF is a more appropriate analytical tool than SV.
2. A new product line is introduced. When a new product line is introduced -- and especially when the new product introduction might be staged -- SV analysis is a better method than TURF because it takes all uncertainties into its calculation, including the best and worst possible market conditions. When the product line is extended or complemented, and the objective is to identify the items that have largest incremental gains relative to those items already existing in the line, TURF is a better approach.
3. The market is relatively dynamic. In fast-paced industries, uncertainty is the dominant force that no manager can afford to ignore. It would be safer to take the unexpected into consideration by using SV.

In summary, when the number of items in the final line is unclear, when a new product line is introduced, and/or the market is relatively dynamic, SV is probably more appropriate than TURF. Conversely, when the market objective is clearly defined, existing lines need to be extended, and/or the market is relatively stable, TURF is probably more appropriate than SV.