A profit-oriented approach for selection of new product scheme

Xinggang Luo, Yan Cao, Chun Kit Kwong, Jiafu Tang

Research output: Chapter in book / Conference proceedingConference article published in proceeding or bookAcademic researchpeer-review

Abstract

The multinomial logit (MNL) consumer choice rules employed in the extant product design research assume that a product always has a market share even though the product has a very low utility value. In this paper, a new consumer choice rule integrating the dollar-scaled utility with piecewise logit function is proposed to avoid estimation bias caused by this problem. A profit maximizing model under the proposed rule is established in a multi-segment product market. It has been proven that in an unpartitioned product market, a local optimal solution of the model is also a global optimal solution, and hence standard nonlinear programming algorithms can be applied. An algorithm based on interval analysis is developed to solve the model under a multi-segment market. Finally, an example of selection of new product scheme is given to illustrate the feasibility and effectiveness of the proposed model and algorithm.
Original languageEnglish
Title of host publicationProceedings of the 2012 24th Chinese Control and Decision Conference, CCDC 2012
Pages1793-1798
Number of pages6
DOIs
Publication statusPublished - 1 Oct 2012
Event2012 24th Chinese Control and Decision Conference, CCDC 2012 - Taiyuan, China
Duration: 23 May 201225 May 2012

Conference

Conference2012 24th Chinese Control and Decision Conference, CCDC 2012
CountryChina
CityTaiyuan
Period23/05/1225/05/12

Keywords

  • consumer choice rule
  • new product development
  • product design
  • product positioning

ASJC Scopus subject areas

  • Information Systems and Management
  • Control and Systems Engineering

Cite this