Narrowcast Advertising Retail Metrics: A Simulation with Fuzzy Product Profitability Potential

Abstract

Narrowcast advertising is becoming a prominent means to modify retail product consumption. This consumption is directed to maximize profit despite changes in consumer preferences and is effected by changes to the number of advertising impressions and their product content. The profitability potential of a product quantifies possible future earnings for a retail outlet and is a useful tool for retail decision makers. Common retail metrics, such as sales data, surveys of consumer product preferences, and advertising impressions, can be fused to robustly define product profitability potential. This paper evaluates several profitability potential definitions that fuse three common retail measurements encoded as fuzzy sets. The simulation considers a pool of consumers who act on their product preferences and modify these preferences in response to advertising. The retail outlet modifies advertising playout in an attempt to maximize profit. Control retail outlets compare results across the same initial consumer population and price structure. Profitability definitions that included advertising impressions performed well against other definitions.