A New Evaluation Method of Interaction Effects Using Compound Added Functions and the Analysis on its Relationship to the Attributes of Potential Customers

Abstract

At the 2004 SAVE Conference, the authors have proposed a method for evaluating the interaction effects produced by compounding added functions monetarily using the 3 indices of the amount of the interaction effects: the ratio of the interaction effects, and the rate of recognizing the interaction effects, and clarified its usefulness. In this study, they further analyze the difference in the scale of effectiveness of interaction effects caused by attribute differences of potential customers, and clarify the relationship between the attributes of potential customers and the interaction effects. They demonstrate that leveraging the relationship between the potential users and the interaction effects can help calculate predicted selling price, which is the key to establish a strategic product concept-making, a standard selling price and a target cost.