This book is about marketing models and the process of model building.
Our primary focus is on models that can be used by managers to support
marketing decisions. It has long been known that simple models usually
outperform judgments in predicting outcomes in a wide variety of
contexts. For example, models of judgments tend to provide better
forecasts of the outcomes than the judgments themselves (because the
model eliminates the noise in judgments). And since judgments never
fully reflect the complexities of the many forces that influence
outcomes, it is easy to see why models of actual outcomes should be very
attractive to (marketing) decision makers. Thus, appropriately
constructed models can provide insights about structural relations
between marketing variables. Since models explicate the relations, both
the process of model building and the model that ultimately results can
improve the quality of marketing decisions. Managers often use rules of
thumb for decisions. For example, a brand manager will have defined a
specific set of alternative brands as the competitive set within a
product category. Usually this set is based on perceived similarities in
brand characteristics, advertising messages, etc. If a new marketing
initiative occurs for one of the other brands, the brand manager will
have a strong inclination to react. The reaction is partly based on the
manager's desire to maintain some competitive parity in the mar- keting
variables.