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Measured Talk: The Science of Marketing

The debate about the usefulness of such scientific methods in more evolving contexts such as India is an ongoing one, writes Arindam Banerjee.

india Updated: Jan 03, 2008 01:26 IST
Measured Talk | Arindam Banerjee
Measured Talk | Arindam Banerjee

Frank Bass’s glorious innings of 52 years as a management academic ended in late 2006. It was his 25th year as a professor of marketing science at the University of Texas at Dallas.

Often referred as the “Father of Marketing Science”, Bass is best known for his 1969 research paper on developing a “Demand Model for Consumer Durables”. Color television was just introduced in America at that time and he decided to develop a unique mathematical demand model that incorporated consumer traits such as “innovativeness” and “imitation”.

His model was amazingly accurate in predicting the television sales, giving a big spurt to research in the area of consumer adoption process. The “Bass Model” as it was later called, turned out to be in the Top Ten Most Influential Papers published in the ‘50 years of Management Science’. Bass went on to co-found ‘Marketing Science’, arguably the most prestigious quantitative marketing journal in the field today.

Over the years, the Bass Model has provided incredible insights into forecasting category-level demand for durable goods. The model’s appeal lies in the application of the diffusion model (used in epidemiology to study growth of carcinogenic cells) to consumer behavior, explaining the rate of new product adoption at a point in time to be chiefly influenced by the cumulative number of people who have already adopted the product up to that time, within the constraint of a finite market size.

Bass’s conceptualisations of market theory based on mathematical models spurred the development of marketing as a science. It kindled interest among academics to validate market phenomena through quantitative models and their subsequent measurement using actual market data. This initiated healthy competition in marketing between a methodology that is disciplined, more structured yet parsimonious in approach, vis a vis a more pragmatic, “softer” perspective based theory-building “case methodology” approach. Additionally, marketing practice in developed economies has evolved the culture of frequently validating its decisions using mathematical models based on market data.

What has fueled such a growth in quantitative applications in marketing since Bass’s seminal paper? First, it greatly helped to have a committed investment across the industry in data collection and data management processes. This commitment was noticed in many business domains and has been a prime mover for applying empirical methods to marketing issues.

Second, intense competitive conditions in many evolved markets provided very little opportunities for damage control in case strategies went awry. Here, focus and precision became critical when making business decisions. Quantitative science provided such focus and precision to support decision making. Such decision initiatives flourish in more “predictable” environments, often a distinctive feature of relatively saturated/evolved markets.

The debate about the usefulness of such scientific methods in more evolving contexts such as India is an ongoing one. Until early this decade, decision makers in India would generally pay lip service, if at all, to such eclectic methods. At an overarching level, quantitative aspects of marketing have long been restricted to the standard maneuvers by the marketing research department to gather consumer insights.

Of late, there have been subtle changes in attitude. Availability of large scale databases in certain sectors, notably the service sector, has provided some impetus to building analytical systems to scientifically measure consumer responses and their application to calibrate marketing decisions. With increasing competition, it’s possible such structured approaches to marketing decision making will gain prominence.

What will it take organisations to equip themselves for this change? A mix of appropriate inputs (rich data), capable resources to build such scientific approaches and also an organisational culture that has an appetite to absorb such scientific output to make effective decisions. Experience from other markets proves that the first and the last issues are critical, time consuming and more complex to manage.

While evolutionary forces will drive firms to equip themselves with these new skills over time, foresight and pragmatic leadership – in academia and industry – will certainly help facilitate a smoother transformation. That will be somewhat in the spirit of Bass’s original resolve to pioneer the explanation of generalised marketing phenomena through mathematical and statistical models.

Professor, Indian Institute of Management - Ahmedabad