Optimal product positioning with consideration of negative utility effect on consumer choice rule

X. G. Luo, Chun Kit Kwong, J. F. Tang, Y. L. Tu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

17 Citations (Scopus)

Abstract

In most studies related to product positioning, probabilistic consumer choice rules assume that a product always gains some market share no matter how small a product's utility value is or even if the utility value is negative. Some researchers have considered this problem in multidimensional-scaling-based model or share-of-surplus choice rule. In this study, we consider this problem for multinomial logit rule by introducing a piecewise function and establishing a conjoint-analysis-based one-step optimization model for product positioning. Interval analysis is applied to obtain the optimal price of the new product from the model, and the mathematical properties of the profit-maximizing model are analyzed. An interval-analysis-embedded Tabu Search (TS) algorithm is developed for solving the model. An industrial application employing the proposed model and the interval-analysis-based enumeration method is presented and sensitivity analysis is performed. An experiment for randomly created large-scale product positioning problems is carried out to evaluate the feasibility of the proposed TS algorithm.
Original languageEnglish
Pages (from-to)402-413
Number of pages12
JournalDecision Support Systems
Volume54
Issue number1
DOIs
Publication statusPublished - 1 Dec 2012

Keywords

  • Consumer choice rule
  • Interval analysis
  • Product positioning
  • Tabu search

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Developmental and Educational Psychology
  • Arts and Humanities (miscellaneous)
  • Information Systems and Management

Cite this