A heuristic approach to product design

Article Abstract:

Marketing's main concern is finding new, multi-attribute products with the highest share of choices in the marketplace. A dynamic programming heuristic can be used to find approximate solutions to this problem. Input data are idiosyncratic multiattribute preference functions using conjoint or hybrid conjoint analysis. Status quo products are usually considered less desirable when an alternate product appears to have greater utility. The proposed heuristic dominates an alternative lagrangian-relaxation heuristic in regard to computation time and approximation of the optimal solution. The heuristic identifies product profiles whose share of choices is high, indicating that it nearly matches the optimal solution.

Models, Product development, New products, Product introduction

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Heuristics for product-line design using conjoint analysis

Article Abstract:

Conjoint analysis can be used for designing product-lines, but calculating the utilities of candidate items using conjoint data can yield results that are not feasible within a multi-attribute context. Optimal product-line construction within a multi-attribute context should be done directly from part-worth data. An extension of the dynamic programming heuristic for selecting single items of Rajeev Kohli and Ramesh Krishnamurti (1987) can be used used to structure product lines that maximize seller's return, buyer's welfare, or share. The use of Kohli and Krishnamurti's heuristic generates solutions designs that are no worse than the solutions of heuristics currently used for product-line design.

Methods, Product lines, Kohli, Rajeev, Krishnamurti, Ramesh

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A cooperative game theory model of quantity discounts

Article Abstract:

A bargaining problem consisting of a monopolistic seller and a buyer negotiating over quantities and average unit prices is used to analyze a transaction-efficiency rationale for quantity discounts. The outcome is found to belong to the set of quantity discounts described by Lal and Staelin (1984) and Dada and Srikanth (1987) because it maximizes the efficiency gain between the seller and the buyer.

Pricing, Negotiation, Negotiations, Trade discounts

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