CHAPTER 9
Quantitative methods in
marketing
LUIZ MOUTINHO and ARTHUR MEIDAN
Introduction
Marketing was one of the last of the major
functional areas of management activity to be
entered by quantitative methods and tech-
niques in a systematic way, and only in the last
four decades or so was any significant progress
achieved. This relative lag of quantitative meth-
ods progress in marketing was attributed to a
number of factors:
1 The complexity of marketing phenomena. This is
due to the fact that when stimuli are applied
to the environment, the responses tend to be
non-linear, to exhibit threshold effects (a
minimum level of stimulus needs to be applied
before response occurs), to have carry-over
effects (for example, response to this period of
advertising will occur in future) and to decay
with time in the absence of further
stimulations.
2 Interaction effects of marketing variables. This
means that the impact of a single controllable
marketing variable is difficult to determine due
to interactions of the variable with the
environment and also with other marketing
variables. Indeed, most of the variables in
marketing are interdependent and interrelated.
3 Measurement problems in marketing. It is often
difficult to measure directly the response of
consumers to certain stimuli and therefore
indirect techniques are often used. An example
is the use of recall measures to ascertain the
effectiveness of advertisements.
4 Instability of marketing relationships. The
relationship between marketing responses and
marketing decision variables tends to be
unstable due to changes in taste, attitude,
expectations, and many others. These factors
make continuous market measurements and
revision of decisions crucial to marketing.There are several ways in which quantitative
methods can be used in marketing. One of
these is through the classification of marketing
into decision areas which confront the market-
ing manager and which include product
development, pricing, physical distribution,
salesforce, advertising and consumer behav-
iour. However, it is thought to be more appro-
priate first to classify the techniques which are
used in marketing and to fit in the situations
where these models are used most frequently.