Optimal Product Design by Sequential Experiments in High Dimensions

44 Pages Posted: 7 Jan 2016 Last revised: 30 Mar 2018

See all articles by Mingyu Joo

Mingyu Joo

University of California, Riverside - School of Business

Michael Thompson

The Procter and Gamble Company

Greg M. Allenby

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

Date Written: March 26, 2018

Abstract

The identification of optimal product and package designs is challenged when attributes and their levels interact. Firms recognize this by testing trial products and designs prior to launch where the effects of interactions are revealed. A difficulty in conducting analysis for product design is dealing with the high dimensionality of the design space and the selection of promising product configurations for testing. We propose an experimental criterion for efficiently testing product profiles with high demand potential in sequential experiments. The criterion is based on the expected improvement in market share of a design beyond the current best alternative. We also 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 Criterion, Expected Improvement, Interaction Effects, Stochastic Search Variable Selection

Suggested Citation

Joo, Mingyu and Thompson, Michael and Allenby, Greg M., Optimal Product Design by Sequential Experiments in High Dimensions (March 26, 2018). Available at SSRN: https://ssrn.com/abstract=2711333 or http://dx.doi.org/10.2139/ssrn.2711333

Mingyu Joo (Contact Author)

University of California, Riverside - School of Business ( email )

900 University Ave.
Riverside, CA 92521
United States

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

Michael 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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