Optimizing Product Variant Placement to Satisfy Market Demand Optimizing Product Variant Placement to Satisfy Market Demand

by Parkinson, Jonathan Roger

Many companies use product families in order to offer product variants that appeal to different market segments while minimizing costs. Because the market demand is generally not uniform for all possible product variants, during the design phase a decision must be made as to which variants will be offered and how many.

This thesis presents a new approach to solving this problem. The product is defined in terms of performance parameters. The market demand is captured in a preference model and applied to these parameters in order to represent the total potential market. The number and placement of the product variants are optimized in order to maximize percentage of the potential market that they span.

This method is applied to a family of mountain bikes and a family of flow-regulating disks used in industrial applications. These examples show that usage of this method can result in a significant increase in potential market and a significant reduction in production costs.