Tuesday, October 03, 2006

DecisionPower Offers Agent-Based Modeling for Marketers

My continuing quest for an agent-based modeling system has led to DecisionPower Inc. (www.decisionpower.com), which claims—accurately, so far as I know—to offer the only agent-based modeling application tailored specifically for marketing. My product review should appear shortly in DM News (www.dmnews.com) and is already in the archive at http://archive.raabassociatesinc.com/2006/10/decisionpower-inc-marketsim/, so you can read the details there. What’s relevant here is whether DecisionPower’s product, called MarketSim, can create a customer experience model.

The short answer is no. MarketSim predicts market share among competitors in a single product category. It models the purchase decisions of individual consumers (the agents) for that category, and aggregates the results to estimate total sales for each product. This is not the same as modeling interactions between consumers and one company, which could span multiple products and interactions other than purchases.

The long answer is maybe. MarketSim inputs include advertising, channels, pricing, and in-store displays, each of which is part of the customer experience. It can also factor in external factors such as the weather and business conditions, which are part of “context” in customer experience analysis. Furthermore, it should be possible to extend a MarketSim model to include other experience components, such as customer service. In MarketSim terms, these would most likely be treated as influences on future purchases, since everything in MarketSim is aimed at calculating purchase propensity. But that might be an okay way to build a customer experience model, so long as you could also gather other statistics such as cost of goods and customer service expense. MarketSim doesn’t appear to calculate those, but perhaps it could be modified to do so.

I still don’t know whether MarketSim is the best tool for customer experience models. It’s expensive and complex and takes considerable training to operate. Restructuring it might actually be more work than starting with a general purpose agent-based modeling system and building from scratch. On the other hand, MarketSim has an impressively detailed model of the awareness-trial-use-repurchase cycle that is a major part of the Customer Experience Matrix. It seems a shame to reinvent that particular wheel.

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