Analytical Hierarchy Process (AHP)

Definition

Analytic hierarchy process (AHP) is a three-step process for making resource allocation decisions.

  1. First, the organization’s objectives, sub-objectives, and strategies are organized hierarchically.

  2. Next, the decision maker evaluates, in a pair-wise fashion, each of the elements in a particular stratum of the hierarchy with respect to its importance in accomplishing each of the elements of the next-higher stratum.

  3. Finally, a model is applied to these pairwise judgments that produces a set of importance (or priority) weights for each element of each stratum in the hierarchy.

Areas of application in marketing include the product portfolio decision, selection of new products to develop, and generation and evaluation of various marketing mix strategies.[1]

 

References

  1. American Marketing Association, AMA Dictionary.

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