Demon, Mark II: An Extremal Equation Approach to New Product Marketing

Numerous alternatives are available in the kinds of studies which can be elected in the market research which should precede the introduction of a new product. This gives rise to a possible network interpretation and treatment by an associated chance-constrained programming characterization and analysis. The resulting model, called DEMON (Decision Mapping Via Optimum GO-NO Networks), which was discussed in [Charnes, A., W. W. Cooper, J. K. DeVoe, D. B. Learner. DEMON: Decision mapping via optimum GO-NO networks—A model for marketing new products. Management Sci.12(11) 865–877.], is here given a new formulation in terms of an extremal equation. A general analytic characterization is achieved and then replaced by more special ones. Means for effecting study decisions and inferences are discussed along with the sensitivity analyses that we associate with GO and NO preemptions, relative to profit and payback constraints. Payback (in a constraint) is here distinguished from its use as a criterion for choice (or objective), the latter being here oriented toward MEMP (maximizing expected maximum profit). A chart is provided for interpreting these and other aspects of policy which bear on the problems of marketing a new product.