The Marketing Book 5th Edition

234 The Marketing Book

Table 9.12 Some major deterministic operational research techniques

applicable in marketing (the methods, advantages, limitations and when

recommended to use)

Method Based on Marketing

applications

Main advantages Major limitations

Linear

programming

Objective and

constraint linear

functions

(a) Advertising

(Higgins, 1973),

space, optimal

media mix

allocations

(b) Distribution

problems, site

location

(Kotler, 1972)

(c) Budget

allocation, new

product

decision

(Wilson, 1975)

(d) Blending

product mixes

(e) Marketing mix

decisions

(a) Maximizes

profitability of

allocations,

subject to

constraints

(b) Minimizes costs

(c) Aids

management in

decision

making

(a) Difficult to

obtain and

formulate the

various

functions

(b) Constraints

must be

altered as soon

as external

and/or internal

factors change

Transportation

model

Transportation/

allocation matrix

ascertaining the

minimum costs,

routes, quantities

supplied, etc.

To allocate

resources, supply

etc. by reducing

transportation

costs. Suitable

particularly for

department stores,

truck rental firms,

transport

companies

Very suitable for

managerial decision

making

Inaccurate in the

longer run as a

result of changes in

costs

Non-linear

programming

Non-linear

objective functions

and non-linear

constraint

relationships

To find the

maximum return

to a new product

search, subject to

budget constraint

(a) When the

relationships

are non-linear

(b) When the

objective

function is

non-linear

while the

constraints are

non-linear

Difficult to

establish non-linear

relationships