A Geomarketing Decision Support System Based on Fuzzy Set Theory

The field of Marketing is concerned with bringing products to customers in the context of a market, with existing dealers and competitors. Marketing instruments can be classified as product, price, promotion and geography. In this last category, we have, for example, distribution channels. Marketing is much related to geography. Some sources state that about 90% of business information are geographical. Therefore, marketers need to analyse efficiently geographical information in order to gain competitive advantage and effectiveness in business.

Geomarketing uses geographical criteria to optimise commercial actions, and consists in modelling and analysis of correlation factors between lifestyles and work-styles of consumers and their consuming habits. As examples of analysis, we have market segmentation and sales territory definition. Geographical Information Systems provides a platform that enables the representation of existing spatial relations between market components. Furthermore, graphical visualisation of analysis results enhances their understanding.

Marketing Decision Support Systems consists of information, systems, tools and techniques such as models, with supporting software and hardware. With these systems an organisation can gather and interpret relevant information, in order to improve the decision making process and proceed with marketing actions. Because there is an exponential growth of the amount of information that managers get during decision processes, models are useful to relate information with decision needs. Examples of models include multiple regression and mathematical equations solved by linear programming techniques. Models can be used in an iterative way, changing values of models' inputs to enable the study of reactions to different marketing actions. These systems can be linked to a GIS, to constitute Geomarketing Decision Support Systems.

Given this, we propose to present a specification and prototype of a Geomarketing Decision Support System based on Fuzzy Set Theory. This system provides marketers with a support for the decision-making process, coupling with a set of geomarketing problems, to satisfy marketers' needs of efficient geographical information analysis.

This system has the advantage of handling imprecise data. In fact, some of the biggest difficulties in the application of GIS in business come from lack of exactness of data about markets. On the other hand, since information with the required precision for statistical modelling is rarely obtained, an alternative for this type of modelling is needed. To overcome these difficulties, the system uses Fuzzy Data and Fuzzy Modelling. Fuzziness occurs when an object or a fact cannot be defined precisely. Fuzzy Set Theory is an appropriate means of modelling imprecision or vagueness. In addition, an expert doing spatial analysis may prefer to work in imprecise terms, closely to the way he deals with problems. Among other advantages over classical models, such as statistic models, fuzzy models are easier to understand, build, and modify. Finally, the integration of imprecise data models with visualisation tools is considered a pre-requisite for the effective implementation of decision support systems.