A dynamic decision support system to predict the value of customer for new product development

Abstract

In recent years, firms have focused on how to enter markets and meet customer requirements by improving product attributes and processes to boost their market share and profits. Consequently, market-driven product design and development has become a popular topic in the literature. However, past research neither covers all of the major influencing factors that together drive customers to make purchase decisions, nor connects these various influencing factors to customer purchasing behavior. Past studies further fail to take the time value of money and customer value into consideration. This study proposes a decision support system to (a) predict customer purchasing behavior given certain product, customer, and marketing influencing factors, and (b) estimate the net customer lifetime value from customer purchasing behavior toward a specific product. This will not only enable decision-makers to compare alternatives and select competitive products to launch on the market, but will also improve the understanding of customer behavior toward particular products for the formulation of effective marketing strategies that increase customer loyalty and generate greater profits in the long term. Decision-makers can also make use of the system to build up confidence in new product development in terms of idea generation and product improvement. The application of the proposed system is illustrated and confirmed to be sensible and convincing through a case study.