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PAMB-OST 4

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by

nikhil rao

on 24 March 2011

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Transcript of PAMB-OST 4

Predictive Analysis for Marketing Budget using Open Source Technologies GENESIS of an IDEA !!! INNOVATION Latin Hypercube NSG2 Sobol In mathematics, computer science and economics, optimization, refers to choosing the best element from some set of available alternatives. Web Tool - Better Collaboration
Scalable - Same tool can be configured for multiple Organizations
Reporting - Summary and detail reports for optimized outputs
What IF Analysis - Use scenario analysis to determine impact of each constraint on the overall objective
Good Performance Advantages Low Licensing Cost - approx $40,000 per year
No Hardware Cost
Good for small scale implementation
Just build for what we want Advantages + = SAS Solver Problem Statement INNOVATION OPTIMIZATION " In mathematics, computer science and economics, optimization, refers to choosing the best element from some set of available alternatives" Latin Hypercube NSG2 Sobol Web Tool - Better Collaboration
Scalable - Same tool can be configured for multiple Organizations
Reporting - Summary and detail reports for optimized outputs
What IF Analysis - Use scenario analysis to determine impact of each constraint on the overall objective
Good Performance Advantages Low Licensing Cost - approx $40,000 per year
No Hardware Cost
Good for small scale implementation
Just build for what we want Advantages + = SAS Solver Web Tool - Better Collaboration
Scalable - Same tool can be configured for multiple Organizations
Reporting - Summary and detail reports for optimized outputs
What IF Analysis - Use scenario analysis to determine impact of each constraint on the overall objective
Good Performance Advantages Low Licensing Cost - approx $40,000 per year
No Hardware Cost
Integrate with MS Excel
Just build for what we want Advantages + SAS Solver Open Source Technology Licensing Cost - $ 0 Build for what you want Only pay for Development Cost
VALUE FOR MONEY Accuracy Results returned by R increases the profit by 45 % when compared to figures before optimization
Solver in the same case showed an increase in profit by 19 %
SAS claims to increase the profit by 55 % (source: Forrester Report) Performance R performs ~ 10 - 15 times faster than Solver
Performance of R and SAS are comparable
Performance for R and SAS are better than Solver as they take advantage of server technologies
Solution Delivery It is a Web Application
Optimized Solutions can be stored in public share folders
Easy to conduct What IF Analysis by comparing saved scenarios
R has reporting capabilites as well What is R ? What Next??? Can we build an optimizer using OPEN SOURCE technologies like R and Ruby and make it available for SMB on the "CLOUD" ??????? Monte Carlo Simulation Latin HyperCube NSG2 " Run model iteratively until model is optimized " Sobol Sampling 3) Versatility Implemented solution using R provides the flexibility to select the optimum feature set within given cost range Sample cost comparison Is there a METHOD to this / * = ( ) Other control factor data

Additional sales drivers (e.g., price)
Comp. sales drivers (e.g., Competitor 2 price)
Macroeconomic (e.g., unemploy-ment rates)
Demographic (e.g., median HH income) 1) Define Variables Products Geography Marketing Vehicles Current Marketing Spend on a Product Marketing vehicles reach or cost (e.g., TV TRPs ) Target Population Power Series Fractional Root Semi Log Exponential Modified Exponential Gompertz Adbudg Select Formula 2) Linear eg. eg. Products =

Budget for = $ 30

Budget for = $ 70

Total Marketing Budge = $100

Total Profit = $ 1000 What IF

Budget for = $ 20

Budget for = $ 80

Total Marketing Budget = $100

Total Profit = $ ???? NSG2 Enablers What Next? The Solution can be extended to other domains such as Retail, Pharma, Health Science etc.

Extend mode of delivery to enable the tool as cloud (Platform as service)
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