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Consumer Forecasting Micro-Simulation for Strategic Planning and Environmental Policy. Intelligent Software Development Dr Don Perugini. What is common to these questions?. How can we manage demand for water to delay $Billions in infrastructure costs? - PowerPoint PPT Presentation
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“Predict a better future”
Intelligent Software DevelopmentDr Don Perugini
Consumer Forecasting Micro-Simulation for Strategic
Planning and Environmental Policy
“Predict a better future”
What is common to these questions? How can we manage demand for water to delay $Billions in infrastructure
costs? How can we more accurately forecast demand/sales to save $millions in
revenue? How can we assess the impact and budget for new concessions or rebates? How can we quantify and isolate the effectiveness of different strategies to
improve business or policy outcomes? How can we increase sales and customer retention? How can we determine when and where to place a new product or franchise?
The answers are dependent on the decisions of millions
of different individual consumers/people
“Predict a better future”
What Influences Decision Making?The real world is complex, dynamic, distributed, heterogeneous,
& human-centric
Social Demographics, psychology, preferences, goals, culture, reasoning, marketing and
market research, communications and perception, social interactions, ...
Economic Price, financial position, expendable income, discretionary and nondiscretionary
expenditure, financial costs/benefits, elasticity, ...
Environmental (physical/engineering) Products, consumption/efficiency, age, size, functionality, weather, ...
Political Policies, regulation, constraints, programs, legal, ...
Millions of individual consumers with different characteristics and circumstances making different decisions in a constantly changing world ...
“Predict a better future”
The ChallengeWe need to better understand
What influences consumer decision making What is the significance/effectiveness of the influence
Then we can Invest in better strategies Improve our investments and efforts Maximise our ROI
... and ultimately produce better policy or business outcomes
We need to accurately predict and influence consumer decision making
“Predict a better future”
Current limitations Spreadsheets
a 2D tool (rows and columns) to tackle an multi-dimensional problem Limited scalability Difficult to run many iterations and incorporate time based influences Incorporating complex logic can become difficult and “unmaintainable” “Hit the wall” – and start again…..
“Econometric Only” and mathematical models Limited in addressing these non-linear, dynamic, human-centric problems Limited detail, unrealistic assumptions about decision making, …
Data mining and statistics Observes what people do, no insight into “why” they do it The past may not be a good predictor of the future
“Predict a better future”
Introducing SimulAItSimulAIt is a new, unique and proven product
New approach – beyond econometrics Initially developed in the Defence Industry to better understand the response
of enemy troops to different allied strategies
SimulAIt incorporates numerous innovative technologies Agent-based modelling & Artificial Intelligence Scalable micro-simulation Multi-dimensional database & human cognition
reasoning engine
Advances in computing capability now enables these technologies to be cost-effectively applied to mainstream Government and business problems
“Predict a better future”
What is SimulAIt?
Business tool to help you accurately predict and explore options to influence mass-consumer behaviour and decision making
Simulates a complete population (e.g. city, state, national levels) – via individual consumers and their decision making
Powered by Census data and population dynamics
Capability to model reactions and behaviours of individual consumers to new strategies, policies, products, prices and competitive behaviour
Handles different types of data to incorporate many decision making factors Models are configured to the specific business problem for better results Enables execution of many “what-if” scenarios to isolate individual
strategies and explore options to influence consumer behaviour Answers a broad range of questions
“Predict a better future”
Proven approachResults of a joint project with Central Highlands Water and
Department of Sustainability and Environment (2010)
Over 95% Accuracy!
“Predict a better future”
Technology theory – ants…
“Predict a better future”
Consumers are rule-based Consumer behaviour can also be described by rules which are driven by a
consumer's demographic characteristics, situation, and preferences Mass-consumer behaviour can be predicted by observing the emergent
behaviour of millions of individual consumers
“Predict a better future”
SimulAIt Platform SimulAIt consumer modelling and forecasting platform uses agent-based
modelling to help you understand and predict mass-consumer behaviour Agents represent consumers and their prescribed rules to simulate decisions
and behaviours of different consumers Rules are constructed by integrating different types of data to better understand
how different consumers make decisions under different circumstances Millions of consumers can be simulated using SimulAIt, allowing you to
predict and explore options to influence mass-consumer behaviour
“Predict a better future”
SimulAIt Overview
Dynamic multi-dimensional
databaseModels
SimulAIt EngineABS & Population
Dynamics
Data:• Market research & social data• Econometric & statistical data• Engineering and environmental data• Customer data (billing, purchases....)
Configuration• Scenarios• Trends• Assumptions• Parameters/variables
Input OutputExecution of Multiple Scenarios
Results• Demand Forecasts• Product uptake• Revenue forecasts• Scenario comparisons• Drill-down by dimensions (regions, demographics, time)
“Predict a better future”
SimulAIt Outputs Type of outputs
Consumption Revenue
Output formats Graphs, GIS, tables, spreadsheets Raw results
Slice and dice, drill down, filter..... Region Time Product / Product Group Demographic type
“Predict a better future”
Tables and raw data
“Predict a better future”
SimulAIt GIS Output
“Predict a better future”
CustomersCustomers
Awards
Cleantech ExcellenceAward 2009Runner Up 2009
“Predict a better future”
CHW/DSE – Bounce-backStrategic business problems addressed
Bounce-back from easing restrictions Pricing impact on consumption Impact of product uptake Business case to regulators Demographic analysis
Involved different departments Forecasting, marketing, strategy, finance
Accuracy in validation over 95% Over 99% accuracy in forecasting demand
bounce-back and behaviour maintenance
Ballarat validation
Bendigo validation
“Predict a better future”
DSE RebatesObjective
Identify a mix of products and prices for the water rebates program that maximises efficiency and keeps within the program budget
Simulation Incorporated consumer preference and affordability, and product age,
failure and price Simulated product uptake and efficiency with different prices and
consumer types Simulated 2 million households, 4.5 million consumers
Outcomes Cost/benefit (triple bottom line) analysis of different product mixes and
prices Accurate predictions of product up-take and budget spend Analysis to assist with targeted marketing of the rebate program
“Predict a better future”
Adelaide Water Pricing Simulated 0.5 million households Different responses of 400 demographic types to water price Identified a more effective and fairer pricing policy… that increases revenue
“Predict a better future”
Questions?
“Predict a better future”
Intelligent Software Development Pty Ltd
Innovation HouseMawson Lakes Boulevard
Technology Park, Mawson LakesSouth Australia, 5095
Phone: +61 8 8343 8455Fax: +61 8 8260 8100
