Perceptual maps and the optimal location of new products

Abstract This paper presents an approach to making marketers' perceptual mapping techniques more valuable early in the new product design process. Recent advances in economics can be used to build perceptual maps into market models that can predict the demand for new products. To evaluate the profitability of alternative designs, information on competitive reactions and costs must be added to market models. Recent advances in facility location analysis can then be exploited to perform optimization analyses to support decision-making. The most promising approach involves discrete optimization. The paper stresses unsolved problems and possibilities for cross-fertilization among marketing, economics, and operations research.

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