Maximizing Your Optimization

Optimization means"the action of finding the best solution." Whether it be Mathematical programming, or optimization modeling. Mathematical programming is concerned with finding the optimal solution to a problem.

When optimization first started it was initially used as a way to mathematically determine the optimal allocation of scarce resources. This concept has been borrowed by business people to aid decision- making.

Optimization has been used in the general areas of manufacturing, airlines, and financial investment risk assessment. Most recently, the concept has been adopted by marketing.

Everyone has heard the phrases site optimization, search engine optimization, event optimization, and campaign optimization. A more recent concept with a broader application to marketing is the idea of marketing optimization.

Marketing optimization is to determine optimal subset of different combinations that will maximize profit.

Marketing's primary responsibility to the organization is to generate profitable revenue growth. You would think that maximizing profit would be relatively easy: Just to achieve the full profit potential for each and every customer. This is easier said then done.

The number of customers, products, and communication channels are complex. Often making it difficult to find the right set of customer-product-channel combinations taht will maximize profits as well as ensure customer satisfaction.

At the same time, product life cycles are getting shorter,competition is fiercer, market fragmentation and the number of segments are greater, and change is accelerating. All this makes the idea more complex. That is why marketing optimization helps address that level of complexity.

The use of data and analytics, a company can develop market optimization processes and models to help determine which customers should be offered which product through a direct channel, and which purchases customers make via what channel that are most profitable.

This can also help determine the maximum possible profitability of a multi-offer campaign and the optimal mix of offers to send each customer.