Modeling of Customer Behavior in a Mass-Customized Market

Abstract

The use of market simulation models becomes increasingly widespread as it helps improve enterprise planning and product delivery. In case of mass customization approach, which aims to simultaneously target scores of individual customers offering them product variations tailored specifically to fit their individual needs, understanding customer behavior under growing market stratification conditions is critical. This paper describes a market simulator in which individual customers are represented as software agents, behavior of which is based on a set of predefined rules describing their behavior under conditions of abundant choice. Parameters in those rules can be either fixed or follow some probabilistic distributions. Customers/agents operate in a market offering them a line of products, which have a set of customizable features, presumably addressing the needs of customer population. The paper describes in detail the decision process of an agent, market fragmentation design, and presents example results which can be used to determine desired variation offering of a product.KeywordsProduct varietydecision makingcustomer satisfaction