An essay on aspects of probability in marketing strategy

Abstract

A major area of the use of probability in marketing strategy is in market management, specifically in market analysis for the estimation of individual level market response coefficients to marketing stimuli such as price, advertising and promotions. In this paper we derive probability measures for two important areas pertinent to marketing strategy. (1) Given brand choice literature we derive brand choice probabilities for brand choice and category incidence with category incidence as an event rather than as given. We term this as the holistic probability of choice of a brand and examine the assessment of category incidence probability. We also identify ‘brand stature’. (2) Promotions considered as incidence and the consequent holistic probability of brand choice and promotions and its implications. We also consider briefly (3) aspects of holistic brand choice probabilities and store choice; (4) probability aspects in loyalty and (5) probability aspects in diffusion of new products.