INTELLIGENT SUPPORT SYSTEMS FOR MARKETING DECISIONS

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1 INTELLIGENT SUPPORT SYSTEMS FOR MARKETING DECISIONS

2 INTERNATIONAL SERIES IN OPERATIONS RESEARCH & MANAGEMENT SCIENCE Frederick S. Hillier, Series Editor Stanford University Weglarz, 1. / PROJECT SCHEDULING: Recent Models, Algorithms and Applications Sahin, I. & Polatoglu, H. / QUALITY, WARRANTY AND PREVENTIVE MAINTENANCE Tavares, L.V. / ADVANCED MODELS FOR PROJECT MANAGEMENT Tayur, S., Ganeshan, R. & Magazine, M. / QUANTITATIVE MODELING FOR SUPPLY CHAIN MANAGEMENT Weyant, J. / ENERGY AND ENVIRONMENTAL POLICY MODELING Shanthikumar, J.G. & Sumita, U. / APPLIED PROBABILITY AND STOCHASTIC PROCESSES Liu, B. & Esogbue, A.O. / DECISION CRITERIA AND OPTIMAL INVENTORY PROCESSES Gal, T., Stewart, T.1., Hanne, T. / MULTICRITERIA DECISION MAKING: Advances in MCDM Models, Algorithms, Theory, and Applications Fox, B.L. / STRATEGIES FOR QUASI-MONTE CARLO Hall, R. W. / HANDBOOK OF TRANSPORTATION SCIENCE Grassman, W.K. / COMPUTATIONAL PROBABILITY Pomerol, J-c. & Barba-Romero, S. / MULTICRITERION DECISION IN MANAGEMENT Axsater, S. / INVENTORY CONTROL Wolkowicz, H., Saigal, R., & Vandenberghe, L. {HANDBOOK OF SEMI-DEFINITE PROGRAMMING: Theory, Algorithms, and Applications Hobbs, B.F. & Meier, P. / ENERGY DECISIONS AND THE ENVIRONMENT A Guide to the Use ofmulticriteria Methods Dar-EI, E. / HUMAN LEARNING: From Learning Curves to Learning Organizations Armstrong, J.S. / PRINCIPLES OF FORECASTING: A Handbookfor Researchers and Practitioners Balsamo, S., Persone, V., & Onvural, R.I ANALYSIS OF QUEUEING NETWORKS WITH BLOCKING Bouyssou, D. et al. / EVALUATION AND DECISION MODELS: A Critical Perspective Hanne, T. / INTELLIGENTSTRATEGIES FOR META MULTIPLE CRITERIA DECISIONMAKING Saaty, T. & Vargas, L. / MODELS, METHODS, CONCEPTS and APPLICATIONS OFTHE ANALYTIC HIERARCHY PROCESS Chatterjee, K. & Samuelson, W. {GAME THEORY AND BUSINESS APPLICATIONS Hobbs, B. et al. / THE NEXT GENERATION OF ELECTRIC POWER UNITCOMMITMENT MODELS Vanderbei, R.I. { LINEAR PROGRAMMING: Foundations and Extensions, 2nd Ed. Kimms, A. / MATHEMATICAL PROGRAMMING AND FINANCIAL OBJECTIVES FOR SCHEDULING PROJECTS Baptiste, P., Le Pape, C. & Nuijten, W. / CONSTRAINT-BASED SCHEDULING Feinberg, E. & Shwartz, A. / HANDBOOK OF MARKOV DECISION PROCESSES: Methods and Applications Ramik,1. & Vlach, M. {GENERALIZED CONCAVITY IN FUZZY OPTIMIZATION AND DECISION ANALYSIS Song, J. & Yao, D. / SUPPLY CHAIN STRUCTURES: Coordination, Information and Optimization Kozan, E. & Ohuchi, A. { OPERATIONS RESEARCH/ MANAGEMENT SCIENCE AT WORK Bouyssou et al. {AIDING DECISIONS WITH MULTIPLE CRITERIA: Essays in Honor ofbernard Roy Cox, Louis Anthony, Jr. {RISK ANALYSIS: Foundations, Models and Methods Dror, M., L'Ecuyer, P. & Szidarovszky, F. / MODELING UNCERTAINTY: An Examination ofstochastic Theory. Methods, and Applications Dokuchaev, N. / DYNAMIC PORTFOLIO STRATEGIES: Quantitative Methods and Empirical Rules for Incomplete Information Sarker, R., Mohammadian, M. & Yao, X. / EVOLUTIONARY OPTIMIZATION Demeulemeester, R. & Herroelen, W. / PROJECT SCHEDULING: A Research Handbook Gazis, D.C. / TRAFFIC THEORY Zhu, J. / QUANTITATIVE MODELS FOR PERFORMANCE EVALUATION AND BENCHMARKING Ehrgott, M. & Gandibleux, X. / MULTIPLE CRITERIA OPTIMIZATION: State ofthe Art Annotated Bibliographical Surveys Bienstock, D. / Potential Function Methodsfor Approx. Solving Linear Programming Problems

3 INTELLIGENT SUPPORT SYSTEMS FOR MARKETING DECISIONS Nikolaos F. Matsatsinis Technical University of Crele Yannis Siskos Technical University of Crele SPRINGER SCIENCE+BUSINESS MEDIA, LLC

4 Library of Congress Cataloging-in-Publication Data A C.I.P. Catalogue record for this book is available from the Library ofcongress. Matsatsinis, Nikolaos & Siskos, Yannis/ INTELLIGENT SUPPORT SYSTEMS FOR MARKETING DECISIONS ISBN ISBN (ebook) DOI / Copyright 2003 by Springer Science+Business Media New York OriginaIly published by Kluwer Academic Publishers in 2003 Softcover reprint of the hardcover Ist edition 2003 AlI rights reserved. No part ofthis work may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilm ing, record ing, or otherwise, without the written permission from the Publisher, with the exception of any material supplied specificaliy for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser ofthe work. Permission for books published in Europe: permissions@wkap.nl Permissions for books published in the United States of America: permissions@wkap.com Printed on acid-free paper.

5 Contents Preface Vll PART I - Marketing Decisions Decision Analysis and Support 2 The Structure ofmarketing Decisions 3 Strategic Marketing Decisions PART II - Intelligent Support Systems 4 Information Systems 5 Decision Support Systems 6 Advanced Decision Support Systems 7 Intelligent Decision Support Methods 8 Intelligent Decision Support Systems in Marketing 9 New Product Development Methodology 10 Analysis and Design ofmarkex 11 Applications in Marketing References Index

6 Preface The recent collaboration of Multicriteria Analysis, Decision Support Systems and Artificial Intelligence in Marketing, has yield particularly significant results in strategic marketing decisions, especially in decisions related with new product development and formation of penetration strategies. The aim ofthis book is to cover the gap of international literature concerning these results. The first applications of Artificial Intelligence in Marketing appeared in 1986, with the publishing of the work of Choffray and Chapin, and Rangarwamy, Burke, Eliashberg, and Wind. These research efforts have focused, on one hand, on the pure scientific direction (type of logic process, knowledge structure, etc) and on the other hand on the support of marketing decisions, which has been developed more extensively. In this book, the effort is to record and analyze current operational intelligent marketing decision support systems. Furthermore, the proposed multicriteria methodology for new product development decisions approaches the entire process as a process of integrating new product development decisionmakers with intelligent decision support systems. An early attempt involved the design of a new methodology for market analysis and new product design, proposed by Matsatsinis and Siskos, based on the study of consumer behavior. This methodology has been implemented by an intelligent decision support system, named MARKEX, and has been successfully applied to a series ofreal world market surveys for new product development. The developed system combines the ability to manipulate effectively qualitative and quantitative data through the system's marketing models. The implementation ofthe methodology is accomplished by using several forecasting, data analysis, multicriteria analysis, and branch choice models.

7 Vlll Preface Throughout this book, the following subjects are studied: - The theoretical background required for the development ofintelligent Decision Support Systems in Marketing, such as decision theory, marketing decisions, multicriteria decision analysis, information systems, decision support systems, intelligent decision support methods. - Current trends of Intelligent Decision Support Systems in Marketing and short presentation ofsome characteristic systems. - A new multicriteria methodology for new product development and formation ofmarket penetration strategy, based on the analysis of consumer's behavior. - The implementation ofthis methodology, through an Intelligent DSS. - The procedures followed for knowledge elicitation, acquisition, and representation ofthe system's knowledge bases as well as for the development ofa heuristic brand choice model. - Fundamental issues ofmodern technologies such as intelligent agents. - The system's multicriteria methodology and function through the presentation of a real-world application concerning the development ofa new product. As innovative points ofthis book, the following may be considered: - The proposed multicriteria methodology for new product development decisions and choice ofmarket penetration strategy, based on the qualitative study and analysis of consumer's behavior. - The development of an Intelligent DSS that implements the above mentioned multicriteria methodology. - The presentation ofthe essential scientific background in which the multicriteria methodology and the system are based on. - The analytical presentation ofall the utilized models. - The analytical presentation ofthe system's knowledge bases concerning the choice ofdata analysis method, the assessment offirm's financial status, and the choice ofbrand choice model. - The presentation of a heuristic algorithm for brand choice model selection. - The presentation ofthe results ofa survey on existing IDSSs in marketing. - The presentation ofcurrent trends in the development ofweb-based DSSs and other modern technologies such as intelligent agents, neural networks, heuristics, etc. - The presentation ofreal-world cases ofnew product development decisions, in which the methodology and the system where applied. In addition to the above, the book differs from other books, also in the following points: - It focuses on a certain category of DSSs, namely on IDSSs.

8 Preface IX - It studies their application and function in a single portion ofmarketing, which deals with the development of new products based on the study of consumers' behavior. - The book examines the application ofmulticriteria decision analysis for qualitative analysis ofdata, consumers' behavior analysis, criteria analysis, and market simulations. In the first part of the book (Part I - Chapters 1, 2, and 3) the basic concepts of multicriteria analysis theory, marketing decisions and strategic decision making in new product development situations are examined. Part II, presents basic concepts from the fields of information systems (Chapter 4), decision support systems (Chapter 5) and intelligent decision support methods (Chapter 7). In Chapter 6, specialized categories of DSSs, such as multicriteria DSSs, web-based DSSs, Group DSSs, Spatial DSSs, etc, are presented. Chapter 8 studies the current situation in IDSSs in Marketing, formed trends, and short presentation of some typical systems of this category. In addition, a list ofidsss in Marketing along with their most important features, which is the resultofan extensive survey, is presented. Part III, begins with the proposed multicriteria methodology for new product development (Chapter 9). Chapter 10 presents the analysis, design and development ofthe Intelligent Decision Support System that implements this methodology. This chapter also presents the system's models and knowledge bases. Finally, in Chapter 11 the methodology and the function of the system are presented through a real-world application concerning the development ofa new product.