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Building Models for Markets

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Modeling Markets

Part of the book series: International Series in Quantitative Marketing ((ISQM))

Abstract

Managers often use rules of thumb for decisions. For example, a brand manager may have defined a specific set of 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 marketing variables. An economic perspective, however, would suggest that the need for a reaction depends on the impact of the marketing activity for the other brand on the demand for the manager’s brand. The models we present and discuss in this book are designed to provide managers with such information.

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Notes

  1. 1.

    Dyson et al. (1997) have countered this claim though.

  2. 2.

    Long-term effects of advertising on sales are studied by Ataman et al. (2010) and Sethuraman et al. (2011) . Sethuraman et al. report an average short-term advertising elasticity of 0.12. The average long-run advertising elasticity is 0.24.

  3. 3.

    A limit price has the property that prices above its value will stimulate entry by competitors, whereas lower prices will discourage entry.

  4. 4.

    A good example can be found in Van Oest et al. (2010) . We give an example of a conceptual model of the Verhouten case in Sect. 2.2.3.

  5. 5.

    The terms “numerically specified marketing model” and “marketing model” will be used interchangeably from now on unless otherwise indicated.

  6. 6.

    Franses (2005) discusses diagnostic tests for each of the three types of models.

  7. 7.

    The terminology adopted here is not unique. Product class sales, brand sales, and market share models are also respectively referred to as primary demand , secondary demand , and selective (or relative) demand models . See, for example, Fischer and Albers (2010) .

  8. 8.

    See Bemmaor and Mouchoux (1991) ; Kaul and Wittink (1995) .

  9. 9.

    See Pleijster et al. (2011) .

  10. 10.

    See also Wierenga (2011) .

  11. 11.

    For a definition of these terms, see Sects. 2.3, 2.4 and 2.8.

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Authors and Affiliations

  1. Department of Marketing, University of Groningen, Groningen, The Netherlands

    Peter S. H. Leeflang, Jaap E. Wieringa & Tammo H. A. Bijmolt

  2. Aston Business School, Birmingham, UK

    Peter S. H. Leeflang

  3. University of St. Gallen, St. Gallen, Switzerland

    Peter S. H. Leeflang

  4. Department of Marketing, Özyeğin University, Istanbul, Turkey

    Koen H. Pauwels

Authors
  1. Peter S. H. Leeflang
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  2. Jaap E. Wieringa
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  3. Tammo H. A. Bijmolt
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  4. Koen H. Pauwels
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Leeflang, P.S.H., Wieringa, J.E., Bijmolt, T.H.A., Pauwels, K.H. (2015). Building Models for Markets. In: Modeling Markets. International Series in Quantitative Marketing. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-2086-0_1

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