Product portfolio identification based on association rule mining

It has been well recognized that product portfolio planning has far-reaching impact on the company's business success in competition. In general, product portfolio planning involves two main stages, namely portfolio identification and portfolio evaluation and selection. The former aims to capture and understand customer needs effectively and accordingly to transform them into specifications of product offerings. The latter concerns how to determine an optimal configuration of these identified offerings with the objective of achieving best profit performance. Current research and industrial practice have mainly focused on the economic justification of a given product portfolio, whereas the portfolio identification issue has been received only limited attention. This article intends to develop explicit decision support to improve product portfolio identification by efficient knowledge discovery,from past sales and product records. As one of the important applications of data mining, association rule mining lends itself to the discovery of useful patterns associated with requirement analysis enacted among customers, marketing folks, and designers. An association rule mining system (ARMS) is proposed for effective product portfolio identification. Based on a scrutiny into the product definition process, the article studies the fundamental issues underlying product portfolio identification. The ARMS differentiates the customer needs from functional requirements involved in the respective customer and functional domains. Product portfolio identification entails the identification of functional requirement clusters in conjunction with the mappings from customer needs to these clusters. While clusters of functional requirements are identified based on fuzzy clustering analysis, the mapping mechanism between the customer and functional domains is incarnated in association rules. The ARMS architecture and implementation issues are discussed in detail. An application of the proposed methodology and system in a consumer electronics company to generate a vibration motor portfolio for mobile phones is also presented. (C) 2004 Elsevier Ltd. All rights reserved.