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Optimal Product Design by Sequential Experiments in High Dimensions

38 Pages Posted: 7 Jan 2016 Last revised: 2 Apr 2017

Mingyu Joo

Ohio State University, Fisher College of Business

Michael L Thompson

The Procter and Gamble Company

Greg M. Allenby

Ohio State University (OSU) - Department of Marketing and Logistics

Date Written: April 1, 2017

Abstract

The identification of the optimal design of products or packaging is challenged when attributes and their levels interact. Firms recognize this by testing product profiles prior to launch, where the effects of interactions can only be revealed in the head-to-head comparison of a small number of finalists. A difficulty in conducting analysis for product design is dealing with the high dimensionality of the design space, which also leads to the selection of promising finalists for testing to be challenging. We propose an experimental criterion of the expected improvement in market share for efficiently testing product profiles with high potential in sequential experiments. Then, we incorporate a stochastic search variable selection method to selectively estimate relevant interactions among the attributes. A validation experiment confirms that our proposed method leads to improved design concepts in a high-dimensional space compared to alternative methods.

Keywords: Design Criteria, Expected Improvement, Interaction Effects, Stochastic Search Variable Selection

Suggested Citation

Joo, Mingyu and Thompson, Michael L and Allenby, Greg M., Optimal Product Design by Sequential Experiments in High Dimensions (April 1, 2017). Available at SSRN: https://ssrn.com/abstract=2711333 or http://dx.doi.org/10.2139/ssrn.2711333

Mingyu Joo (Contact Author)

Ohio State University, Fisher College of Business ( email )

2100 Neil Ave.
Columbus, OH 43210-1144
United States

HOME PAGE: http://www.mingyujoo.com

Michael L Thompson

The Procter and Gamble Company ( email )

Greg M. Allenby

Ohio State University (OSU) - Department of Marketing and Logistics ( email )

Fisher Hall 524
2100 Neil Ave
Columbus, OH 43210
United States

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