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with BayesiaLab
December 1, 2010
Conrady Applied Science, LLC - Bayesia’s North American Partner for Sales and Consulting
Conrady Applied Science, LLC - www.conradyscience.com
Table of Contents
Tutorial 2
Model Development 2
Data Preparation 2
Consumer Research 2
Data Import 2
Unsupervised Learning 5
Preliminary Analysis 6
Variable Clustering 8
Multiple Clustering 10
Analysis of Factors 12
Completing the PSEM 14
Product Optimization 19
Conclusion 24
Contact Information 25
Conrady Applied Science, LLC 25
Bayesia SAS 25
Copyright 25
Acknowledgements
Tutorial on Driver We would like to express our gratitude to Ares Research
Analysis and Product (www.ares-etudes.com) for generously providing data
from their consumer research for our case study.
Optimization with
Abstract
BayesiaLab Market driver analysis and product optimization are one
of the central tasks in Product Marketing and thus
relevant to virtually all types of businesses. BayesiaLab
Introduction provides a unified software platform, which can, based
This tutorial is intended for new or prospective users of on consumer data,
BayesiaLab. The example in this tutorial is taken from
the field of marketing science and is meant to illustrate 1. provide deep understanding of the market
the capabilities of BayesiaLab with a real-world case preference structure
study and actual consumer data. Beyond market
2. directly generate recommendations for prioritized
researchers, analysts and researchers in many fields will
product actions.
hopefully find the proposed methodology valuable and
intuitive. In this context, many of the technical steps are The proposed approach utilizes Probabilistic Structural
outlined in great detail, such as data preparation and the Equation Models (PSEM), based on machine-learned
network learning, as they are applicable to research with Bayesian networks. PSEMs provide an efficient
BayesiaLab in general, regardless of the domain. alternative to Structural Equation Models (SEM), which
have been used traditionally in market research.
BayesiaLab
Bayesia SAS, based in Laval, France has been developing Bayesian Networks
BayesiaLab since 1999 and it has emerged as the leading A Bayesian network, belief network is a directed acyclic
software package for knowledge discovery, data mining graphical model that represents the joint probability
and knowledge modeling using Bayesian networks. distribution over a set of random variables and their
BayesiaLab enjoys broad acceptance in academic conditional dependencies via a directed acyclic graph
communities as well as in business and industry. The (DAG). For example, a Bayesian network could represent
relevance of Bayesian networks, especially in the context the probabilistic relationships between diseases and
of market research, is highlighted by Bayesia’s strategic symptoms. Given symptoms, the network can be used to
partnership with Procter & Gamble, who has deployed compute the probabilities of the presence of various
BayesiaLab globally since 2007. diseases.
Conrady Applied Science, based in Franklin, TN, is a Structural Equation Modeling (SEM) is a statistical
consulting firm specializing in knowledge discovery and technique for testing and estimating causal relations
probabilistic reasoning with Bayesian networks. In 2010, using a combination of statistical data and qualitative
Conrady Applied Science has been appointed Bayesia’s causal assumptions. This definition of SEM was
authorized sales and consulting partner for North articulated by the geneticist Sewall Wright (1921), the
are suited to both theory testing and theory • BayesiaLab functions, keywords, commands, etc., are
development. shown in bold type.
Probabilistic Structural Equation Models • Variable names are capitalized and italicized.
Traditionally, specifying and estimating an SEM required
a multitude of manual steps, which are typically very Model Development
time consuming, often requiring weeks or even months
of an analyst’s time. PSEMs are based on the idea of Data Preparation
leveraging machine learning for automatically generating
Consumer Research
a structural model. As a result, creating PSEMs with
This study is based on a monadic1 consumer survey
BayesiaLab is extremely fast and can thus form an
about perfumes, which was conducted in France. In this
immediate basis for much deeper analysis and
example we use survey responses from 1,320 women,
optimization.
who have evaluated a total of 11 fragrances on a wide
Tutorial range of attributes:
At the beginning of this tutorial, we want to emphasize • 27 ratings on fragrance-related attributes, such as,
the overarching objectives of this case study, so we don’t “sweet”, “flowery”, “feminine”, etc., measured on a 1-
lose sight of the “big picture” as we immerse ourselves to-10 scale.
into the technicalities of BayesiaLab and Bayesian • 12 ratings on projected imagery related to someone,
networks. who would be wearing the respective fragrance, e.g.
“is sexy”, “is modern”, measured on a 1-to-10 scale.
In this study we want to examine how product attributes
• 1 variable for Intensity, a measure reflecting the level
perceived by consumers relate to purchase intention for
of intensity, measured on a 1-to-5 scale.2
specific products. Put simply, we want to understand the
• 1 variable for Purchase Intent, measured on a 1-to-6
key drivers for purchase intent. Given the large number
scale.
of attributes in our study, we also want to identify
• 1 nominal variable, Product, for product identification
common concepts among these attributes in order to
purposes.
make interpretation easier and communication with
managerial decision makers more effective. Data Import
To start the analysis with BayesiaLab, we first import the
Secondly, we want to utilize the generated understanding
data set, which is formatted as a CSV file.3 With
of consumer dynamics, so product developers can
Data>Open Data Source>Text File, we start the Data
optimize the characteristics of the products under study
Import wizard, which immediately provides a preview of
in order to increase purchase intent among consumers,
the data file.
which is our ultimate business objective.
Notation
1 a product test only involving one product, i.e. in our study each respondent evaluated only one perfume.
2 The variable Intensity is listed separately due to the a-priori knowledge of its non-linearity and the existence of a “just-
about-right” level.
3 CSV stands for “comma-separated values”, a common format for text-based data files.
Clicking the Next button, prompts a data type analysis, these variables is already adequate for our purposes.5
which provides BayesiaLab’s best guess regarding the The next screen provides options as to how to treat any
data type of each variable. missing values. In our case, there are no missing values
Furthermore, the Information box provides a brief so the corresponding panel is grayed-out.
summary regarding the number of records, the number Clicking the small upside-down triangle next to the
of missing values, filtered states, etc.4 variable names brings up a window with key statistics of
the selected variable, in this case Fresh.
4 There are no missing values in our database and filtered states are not applicable in this survey.
5 The desired number of variable states is largely a function of the analyst’s judgment.
Note
Unsupervised Learning
As the next step, we will perform the first unsupervised
Needless to say, this view of the network is not very
learning of a network by selecting Learning>Association
intuitive. BayesiaLab has numerous built-in layout
Discovering>EQ.
algorithms, of which the Force Directed Layout is
perhaps the most commonly used.
Best Fit button in the toolbar “zooms to fit” the Preliminary Analysis
graph to the screen. In addition, rotating the graph with The analyst can further examine this graph by switching
the Rotate Left and Rotate Right buttons helps to into the Validation Mode, which immediately opens up
create a suitable view. the Monitor Panel on the right side of the screen.
Note
By default, the Monitors show the marginal distributions The structure of our Bayesian network may be
of all selected variables. This shows, for instance, 9.7% directed, but the directions of the arcs do not
necessarily have to be meaningful.
of respondents rated their perfume at <=2.8 in terms of
the Fresh attribute. For observational inference, it is only necessary that
the Bayesian network correctly represents the joint
probability distribution of the underlying database.
On this basis, one can start to experiment with the
properties of this particular Bayesian network and query
it. With BayesiaLab this can be done in an extremely Switching briefly back into the Modeling Mode and by
intuitive way, i.e. by setting evidence (or observations) clicking on the Flowery node, one can see the
directly on the Monitors. For instance, we can compute probabilistic relationship between Flowery and Fresh in
the conditional probability distribution of Flowery, given detail. By learning the network, BayesiaLab has
that we have observed a specific value, i.e. a specific automatically created a contingency table for every
state of Fresh. In formal notation, this would be single direct relationship between nodes.
P(Flowery | Fresh)
All contingency tables, together with the graph structure, Formal Definition of Mutual Information
thus encode the joint probability distribution of our
original database. ⎛ p(x, y) ⎞
I(X;Y ) = ∑ ∑ p(x, y)log ⎜
Returning to the Validation Mode, we can further y∈Y x∈X ⎝ p(x)p(y) ⎟⎠
examine the properties of our network. Of great interest
is the strength of the probabilistic relationships between
the variables. In BayesiaLab this can be shown by We can also show the values of the Mutual Information
selecting Analysis>Graphic>Arcs’ Mutual Information. on the graph by clicking on Display Arc Comments.
P(i)
DKL = (P || Q) = ∑ P(i)log
i Q(i)
In words, it is the average of the logarithmic difference
between the joint probability distributions P(i) and Q(i),
where the average is taken using the probabilities P(i).
7 An alternative approach is to interpret the derived concept or factor as a hidden common cause.
Multiple Clustering
As our next step towards building the PSEM, we will
introduce these newly-generated latent factors into our
existing network and also estimate their probabilistic
relationships with the manifest variables. This means we
will create a new node for each latent factor, creating 15
new dimensions in our network. For this step, we will
need to return to the Modeling Mode, because the
introduction of the factor nodes into the networks
requires the learning algorithms.
8 Variable cluster = derived concept = unobserved latent variable = hidden cause = extracted factor.
Analysis of Factors Returning to the Validation Mode, we can see five states
We can also further examine how the new factors relate for Factor_0, labeled C1 through C5, as well as their
to the manifest variables and how well they represent marginal distribution. As Factor_0 is a target node by
them. In the case of Factor_0, we want to understand default, it automatically appears highlighted in red in the
how it can summarize our five manifest variables. Monitor Panel.
By right-clicking on the graph, we can switch between these constraints will be extremely important when
the display of the formal factor names, e.g. Factor_0, searching for realistic product scenarios.
Factor_1, etc., and the factor comments, such as
On a side note, an example from the presumably more
Adequacy, Seduction, which is much easier for
tangible auto industry may better illustrate such kinds of
interpretation.
constraints. For instance, a vehicle platform may have an
As in the previous views, it becomes very obvious that inherent wheelbase limitation, which thus sets a hard
the factor Adequacy is most important with regard to limit regarding the maximum amount of rear passenger
Purchase Intent, followed by the factor Seduction. This is legroom. Even if consumers perceived a need for
very helpful for understanding the overall market improvement on this attribute, making such a
dynamics and for communicating the key drivers to recommendation to the engineers would be futile. As we
managerial decision makers. search for optimum product solutions with our Bayesian
network, this is very important to bear in mind and thus
The lines dividing the graph into quadrants reflect the we must formally encode these constraints of our
mean values for each axis. The upper-left quadrant
domain through the Cost Editor.
highlights opportunities as these particular factors are
“above average” in importance, but “below average” in Product Optimization
terms of their rating.
We now return briefly to the Modeling Mode to include
the Product variable, which has been excluded from our
Product Driver Analysis
analysis thus far. Right-clicking the node and then
Although this insight is relevant for the whole market, it
unchecking Properties>Exclusion will achieve this.
does not yet allow us to work on improving specific
products. For this we need to look at product-specific At this time, we will also move beyond the analysis of
graphs. In addition, we may need to introduce factors and actually look at the individual product
constraints as to where we may not have the ability to attributes, so we select Manifest from the Display
impact any attributes. Such information must come from Classes menu.
the domain expert, in our case from the perfumer, who
will determine if and how odoriferous compounds can
affect the consumers’ perception of the product
attributes.
9 Any similarities of identifiers with actual product names are purely coincidental.
rated product in this attribute. Initially, we have the marginal distribution of the
attributes and the original mean value for Purchase
Intent, i.e. 3.77.
The second change results in further subtle improvement Although BayesiaLab generates these recommendation
to Purchase Intent: very quickly and easily, they represent a major
innovation in the field of marketing science. This
particular optimization task has not been tractable with
traditional methods.
Conclusion
The presented case study demonstrates how BayesiaLab
can transform simple survey data into a deep
understanding of consumers’ thinking and quickly
provides previously-inconceivable product
recommendations. As such, BayesiaLab is an
revolutionary tool, especially as the workflow shown
here may take no more than a few hours for an analyst
to implement. This kind of rapid and “actionable”10
insight is clearly a breakthrough and creates an entirely
new level of relevance of research for business
The third and fourth step are analogous and bring us to
applications.
the final value for Purchase Intent of 3.92.
10 The authors cringe at the inflationary use of “actionable”, but here, for once, it actually seems appropriate.