The Marketing Book 5th Edition

238 The Marketing Book

Table 9.14 Applications of dynamic, heuristic and network

programming in marketing (the methods, advantages, limitations and

when recommended to use)

Model Based on Marketing

applications

Advantages Limitations

Dynamic

programming

Recursive

optimization

procedure;

optimizing on a

step-by-step basis

Solving media

selection problems;

distribution

(minimization of

transportation

costs; distribution

of salespeople to

various sales

territories)

(a) Maximizes the

objective over

the planning

period

(b) Introduces new

factors, e.g.

‘forgetting time’,

‘accumulation

or intersections’

(c) Wide potential

application in

industry

The programming

procedure is rather

complex;

computational

difficulties

Heuristic

programming

Orderly search

procedure guided

by the use of rule

of thumb. Based on

‘marginal approach’

or trial and error

Media selection and

scheduling;

warehouse location;

salesforce

allocation; decision

on the number of

items in a product

line; suitable for

making product

promotion

decisions

(a) Good, flexible,

simple and

inexpensive

method

(b) Combines the

analysis into the

style of decision

making and the

reasoning used

by managers

Does not guarantee

optimal solution

Network

programming

(PERT and

CPM)

Presents the wide

range of critical

activities that must

be carried out and

co-ordinated. PERT

acknowledges

uncertainty in the

times required to

complete activities

while CPM does

not. PERT deals

only with the time

factor. CPM refers

to the time-cost

trade-offs as well

Planning, scheduling

and controlling

complex marketing

projects (Bird et al.,

1973), e.g. building

new stores, new

product

development

(Robertson, 1970),

product

commercialization,

advertising–sales

relationships

(Johansson and

Redinger, 1979),

distribution planning

(LaLonde and

Headon, 1973)

(a) Sequences and

times of

activities are

considered,

responsibilities

allocated and

co-ordinated in

large/complex

marketing

projects

(b) Project time can

be forecast and

completion time

may be

shortened

(a) Difficulties in

estimating costs

and times

accurately,

particularly for

new projects

(b) Of use only

when functions

and activities

can, in fact, be

separated