Models for Marketing Strategy
Predicting buyer behavior is often a complicated process that must take into account a number of variables affecting buyer behavior. Models can help marketers make decisions and focus their strategic marketing efforts. Although the advent of the personal computer has made model-building for marketing strategy a more attainable goal for many organizations, it is important that marketing managers and other key players within the organization contribute the expertise of their experience to the development of the model. In addition, the organization can use secondary data or collect new data through surveys, interviews, or other data collection techniques to acquire the data needed for the model. Because the real world is so complex, the model also needs to be complex in most cases. One of the essential aspects of model building is to determine which of the innumerable variables that could be potentially built into the model are important and which are not.
Arguably, done correctly, marketing is both an art and a science. The art part of the equation tends to be obvious. Businesses need to develop corporate logos, design schemes, and other branding art in order to catch the buyer's eye, encourage a purchase, and help ensure brand loyalty. The artwork associated with various media advertisements also needs to be both contemporary to demonstrate to prospective buyers that the organization and its products or services are on the cutting edge yet also distinctively target the tastes and expectations of different market segments. Jingles need to attract attention and be memorable without being obnoxious. However, no matter how stylish, contemporary, or eye-catching one's artwork is or how memorable one's slogan or jingle is, if one's marketing efforts are targeted toward the wrong segment of the market, if an appropriate marketing mix is not determined, or if integrated marketing communications are not designed to maximize the return on investment for one's marketing dollar, the marketing efforts will be less than successful.
On its own, buyer behavior is a complex thing. It is often difficult to try to predict what goods and services a buyer might need or want or to design a marketing campaign that will help sway the buying decision. The situation in which a purchasing decision is made can also impact the probability that a potential buyer will actually purchase one's offering. For example, in a bad economy, there is less money available for spending on non-essential goods and services whereas in a good economy, consumers have more discretionary funds and are more able and willing to spend money on discretionary items and luxuries. These two factors are further complicated by the buying situation: Those factors influencing buying behavior that cannot be predicted from knowledge of either the buyer or the situation alone. For example, Dr. Pepper's advertising campaign a number of years ago that encouraged consumers to "Be a Pepper" seemed to meet all the criteria for advertising success including upbeat music, positive image, and high advertising awareness. Despite the advertisements, however, Dr. Pepper's share of the soft drink market steadily declined (Smith & Swinyard, 1999).
Variables Affecting Buyer Behavior
Predicting buyer behavior is often a complicated process that must take into account any number of variables affecting buyer behavior. Smith and Swinyard list a number of factors that contribute to the complexity of marketing decisions. As mentioned above, determining the right market segment as a focus for one's marketing efforts is an important part of the marketing process. For example, with the right marketing mix and advertising campaign, one might be able to sell the proverbial ice to Eskimos. However, in practice, it would should be much easier to focus on a different market segment that actually needs the ice.
Another consideration that needs to be taken into account in developing a marketing strategy is the multiplicity of products that are available to potential customers. One typically needs to take a different marketing task when entering a market in which similar products or services already exist than in a market in which one's offering is innovative. Similarly, if a product or service is part of a line of products or services already offered by the business, a different marketing effort may be required than if the product or service is new to the organization.
Another consideration when determining how best to structure one's marketing efforts is the possibility of the existence of conflicting objectives. For example, if a cereal manufacturer desired to introduce a new cereal to the marketplace with the objective of carving out a share of the market, it would need to be careful that the market share did not come from the share already held by its existing cereal products.
Another factor affecting the complexity of marketing decisions occurs when different functional areas within the organization have objectives that do not easily support each other. For example, the goal of the marketing department may be to sell as many widgets as possible. However, if the manufacturing department is trying the cut down on warehousing costs and does not have sufficient widgets available for potential customers or does not have in place an effective just-in-time manufacturing system, no matter how many widgets the marketing department sells, the manufacturing department will not be able to fulfill the orders. The effectiveness of one's marketing efforts is also dependent on numerous factors related to the competition. If the competition sells comparable widgets at a lower price and has an established customer base with high brand loyalty, for example, it will be more difficult for another business to gain a share of the market. Similarly, although one can design one's own marketing campaign based on the way the competition is currently marketing their product or service, one cannot necessarily predict how the competition's marketing efforts, goods, or services will change in the future and how this will affect the requirements for their own campaign.
The complexity of determining the appropriate approach for one's marketing efforts must also take into account the fact that the effects of a marketing campaign may last for substantial periods of time even when other market factors change. For example, if one's competition has great brand loyalty for their widget, even if a business introduces a better widget, it may take years to overcome the effects of brand loyalty and win a larger share of the market.
Obviously, accounting for all the factors influencing the probability of success of a marketing effort can be an overwhelming task. One set of tools that can be used to help marketers make such decisions and focus strategic marketing efforts is statistics in general and regression analysis in particular. Statistics and regression analysis allow for the development of various models and decision support systems that help them better understand the intricacies of the real world processes and how best to target their marketing efforts. At one time, the use of such tools was laborious and time consuming, and readily available only to large corporations with the funds to pay for such models. However, with the advent of the personal computer and its relatively faster and less expensive computing power, the ability to model market and buyer behavior is available to most businesses.
In general, a model is a representation of a situation, system, or subsystem. Conceptual models are mental images that describe the situation or system. Mathematical or computer models are mathematical representations of the system or situation being studied. Models can be used in marketing to either represent the current situation of the market or what the market might look...
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