Marketing Engineering: : Computer‐Assisted Marketing Analysis and Planning

Citation

Rich, M.K. (1998), "Marketing Engineering: : Computer‐Assisted Marketing Analysis and Planning", Journal of Business & Industrial Marketing, Vol. 13 No. 1, pp. 82-84. https://doi.org/10.1108/jbim.1998.13.1.82.1

Although many books indicate application for both manager and academic, this one truly accomplishes that role. The authors have evaluated a need in today’s fiercely competitive marketplace for a clearer understanding and practical method of applying the decision models that are available and required for correctly diagnosing various complex market conditions. They have correctly determined a void in current literature that has excluded the practitioner who relies solely on mental models and the quantitatively weak student from being able to grasp the power of available marketing models to assist in making marketing decisions. They have nicely filled that void with this current accomplishment.

Most academic approaches to marketing models have demanded that the student fully embrace the underlying mathematical properties of the model in order to benefit from its use. As a result, numerous students avoid courses involving models while countless practitioners are not willing to exert the time and effort required to master such foundational activities. The authors recognized that the power of the computer can place models within the grasp of any marketer willing to learn the use of appropriate software. Further supporting this approach is the reality that most marketers have access to the power of a personal computer, either as a stand‐alone unit or as part of a more powerful network. It is reasonable to assume that most practicing marketers today will have computing power at their disposal. As a result, this combination of a book, tutorial and CD‐ROM containing operating samples of several key marketing models has been developed for use by anyone desiring to personally experience the value of marketing models available in today’s competitive environment. The materials are designed to give the reader a taste of what’s available, not to train a person to be an analyst or a modeler but to assist the reader in becoming, “an astute user of models and a knowledgeable consumer of modeling results generated by others.” The text and software applications are user‐friendly and do not assume a quantitative underpinning of the reader. To underscore the user‐friendliness, this is the first text where I have read, “We recommend that if you have difficulty with mathematics, you skip over math as you read… .” For many, it will be comforting to know that the authors are aware that there will be those ignoring the math, yet they should still be able to understand and master the materials presented.

The book takes a learn‐by‐doing approach that results in a concise presentation (only 322 pages of actual text plus an accompanying 359 page tutorial) that requires the reader to literally try the models on the CD‐ROM for a complete understanding. The authors have presented models associated with developing marketing strategies including market segmentation, target marketing, positioning, and strategic market analysis. They have also evaluated models involved with more tactical marketing issues such as new product, advertising, salesforce, channel, price, and sales promotion decisions. Each model is linked to an appropriate case, both in an exhibit in Chapter 1 of the text and in the tutorial. Examples to illustrate concepts are liberally sprinkled throughout the text to clarify points made and make the material come alive for the reader. The authors have shown great restraint in avoiding technical jargon that would be easily understood by their colleagues but would confuse their target audience for this work. This is not to imply that the effort results in a shallow development of robust concepts; the finished product offers a meaningful level of detail for those willing to pursue it. Unlike other quantitative efforts, this one delivers each step necessary for understanding the model, its purpose and benefit of use.

The software, unlike many academic applications, is fairly sophisticated in its power and assumes some base understanding of computers to load while being intuitive to operate. Seventeen of the models require the use of Excel spreadsheets necessitating it being on the computer prior to using most of the models supplied on the CD‐ROM. The linkages to the Excel software are automatic from the CD‐ROM, requiring no effort on the part of the student. There are nine other models supplied that do not require the use of Excel. The team working with the authors has done an excellent job in preparing the tutorial and CD‐ROM, resulting in a complete and powerful package where the reader can focus on learning rather than the mechanics involved.

To illustrate the seamless manner that the text, tutorial, and CD‐ROM interrelate, a reading of chapter 10 (“Price and sales promotion decisions”) reveals a discussion concerning price discrimination (page 286). The authors first develop an understanding of price discrimination with an example of four equal‐sized segments of customers in the market for a textbook. The parameters concerning how to price for each market segment is carefully developed in a manner that is easily followed by the reader. After the discussion, the resulting equation is shown, followed by a listing of the features of the resulting price‐discrimination scheme and the difficulties generally faced by those implementing such a program. The concepts of geographic and temporal price discrimination are then briefly discussed. After developing the conditions where temporal price discrimination is feasible, the authors follow their usual practice used elsewhere in the text of providing a current business example (yield management in the airline industry) to illustrate the principles outlined. American Airlines defines the function of yield management as “selling the right seats to the right customers at the right prices” (page 289). Most of us can remember a few years ago when taking a commercial flight, the plane was often sparsely populated at takeoff or was overbooked, resulting in a search for passengers willing to give up their seats for future free flights. In recent months, that phenomenon has all but disappeared with 70 percent of popular route flights filled to capacity with no overbooking. What caused the change? The use of a computer package developed by Bell Laboratories in 1988 that can be used on a simple desktop computer to perform rapid calculations on fare problems with thousands of variables. The result, according to a recent article by Scott McCartney (“Business fares increase even as leisure travel keeps getting cheaper,” The Wall Street Journal, November 3, 1997) is that business travelers that often have to book hours before a flight are paying as much as 20 percent more for a ticket than a year ago, with another 5 percent increase added in September. At the same time, leisure travelers, who can book months ahead, are enjoying as much as a 20 percent reduction in fares. The secret is a yield‐management computer system that constantly monitors the bookings for a flight, compares historical data, analyzes bookings for connecting flights and allocates as many as seven different coach fare “buckets” allocated for that flight. As seats begin to sell at the lower prices, the computer will shut off the lower fares, knowing the approximate number of full‐fare business seats that will be booked often hours before the flight. The authors illustrate this process in two and a half pages, complete with three exhibits. If, after digesting this section in the text, the reader wanted to explore the concept of yield management further, he or she could turn to the tutorial’s index, and find, “Yield management for hotels tutorial,” found on page 341. That page will first direct the reader on how to activate the corresponding model on the CD‐ROM. With three clicks of the mouse, the screen illustrated in the tutorial is seen by the student. The example can then simply be used like a “cookbook,” with each step being replicated on the software as illustrated in the tutorial. By changing the parameters in the problem, the student can witness the yield results instantly thus gaining insight into the power of yield management. After pursuing that exercise, the student can turn the page in the tutorial and follow an additional example of yield management with the Forte Hotel Yield Management Exercise, also on the CD‐ROM. At each step in the process, the authors carefully explain how the model works for further understanding by the student. What this book and supporting materials accomplish is to make the reader aware of the power of programs in permitting the marketer to explore and attempt marketing scenarios not imagined just a few years ago.

Since the practitioner and student alike will be confronted with more information than they can ever hope to assimilate for a given marketing situation, this book (and its supporting materials) offers a variety of models that can be incorporated in the decision‐making process. The authors point out that models, in and of themselves, are simplified and incomplete representations of reality and can only offer greater insight into a decision than would be possible without their use. Models still require judgment to interpret and this book provides sufficient detail to assist in that interpretation process.

This effort opens new frontiers of opportunity for course content in a university setting and marketing department development in the competitive world. The authors have found a definite need in today’s marketplace and have filled it well. Over time with its corresponding ability to reveal needed changes and additions, this work should see many future editions based on the requested input from its readers.