Integrated marketing and operations decisions-making under multi-brand competition

Claim 1

A computer-implemented method for merged marketing management and inventory management, said method comprising the steps of: (a) inputting a consumer preference data representing consumer survey information as to a preference toward each of a plurality of brands of competing goods, by each of a plurality of consumer segments; (b) inputting a plurality of pricing information representing a corresponding price for each of said plurality of brands; (c) inputting a plurality of promotions data characterizing marketing promotions relating to said plurality of brands; (d) producing a segment-level consumer choice model relating said plurality of competing brands and said plurality of consumer segments, comprising sub-steps of: (1) inputting a plurality of data λ h , for h=1 to H, each representing a total amount of purchases over a time period by consumers within a corresponding hth segment of a plurality of H consumer segments; (2) calculating a plurality of data, A ih , for i=1 to B and for h=1 to H, each representing an attraction of each of a plurality of B brands to each of said plurality of H consumer segments, said calculating based in part on said consumer preference data; (3) calculating a plurality of relative market share data, S ih , for i=1 to B and for h=1 to H, each representing a relative market share of each of said plurality of B brands relative to the remainder of said plurality of B brands in each of said plurality of H consumer segments, said calculating based on at least one of said data A ih ; and (4) generating a plurality of mean purchase data, λ ih , for i=1 to B and for h=1 to H, each of said data representing a mean of purchases of each of said plurality of B brands by consumers in each of said plurality of H segments, said generating based on said data λ h ; ##EQU19## where: ∝ i is an attraction of brand i to said plurality of consumer segments, ∝ i being based on said consumer preference data, ε ih is a predetermine error term, X kj is a kth of a plurality of marketing mix variables for brand j, said plurality based on at least one of said plurality of pricing information data and said plurality of promotions data, ##EQU20## is a parameter to be estimated, and f k (.) Is a predetermined monotone transformation of the marketing mix variable X kj , then, a relative market share data, ##EQU21## representing a relative market share of brands B relative to the remainder of brands B in each consumer segment H, (e) generating a brand-level demand forecast data based on said segment-level consumer choice model, each of said output data being a demand forecast for a particular brand from among said plurality of brands in relation to a particular consumer segment from among said plurality of segments, said generating further based, in part, on said pricing data and said promotions data; (f) generating a market-level consumer choice model by aggregating the segment-level model generated at step (d) over the plurality of segments; (g) inputting a total period sales data representing, for each of said plurality of brands, a total sales over a given market over a given period of time; (h) generating a market share data representing, for each of said plurality of brands, a market share in relation to the remainder of said brands, based on said total period sales data; (i) characterizing a brand-level distribution of demand for each of said plurality of brands, said characterizing comprising sub-steps of: (1) calculating a mean of a market share of each said plurality of brands, based on said relative market share data, (2) calculating a joint probability distribution of demands for said plurality of brands, conditional on said total period sales data, (3) calculating a marginal distribution of each of said plurality of brands, based on said mean calculated by step (i)(1) and said total period sales; (j) inputting a plurality of brand unit cost data; and (k) generating a plurality of inventory base stock level data, said data representing an optimal base stock level for a store inventory of each brand in the market, said generating based on said characterizing a brand-level distribution for each of said plurality of brands and on said brand unit cost data.