Strategic Marketing Modeling

Using marketing models can be valuable in order to achieve improvement in the business bottom line. For instance, the 2006 R D expenditures by North American pharmaceutical companies were 55.2 billion or 19.4% of sales (PhRMA 2007). By comparison, the marketing expenditures in 2006 by these companies were 27.3 billion or about 10% of sales (IMS-Health 2006). Given this substantial level of expenses, there is a growing use of and need for analytic and data driven models to support strategic marketing decisions in this particular industry. However, this is a necessity that spans over other type of industries as well. 

4 Linking Marketing and Supply Chain Planning Models 

The price is a sensitive control variable and one used frequently. The price considered is the basic price charged by the firm. The price elasticity of demand is considered in this chapter for this sub-model. Again, more complicated descriptive models can be used to describe the specific behavior of price-demand for a product. It is used ma = 2 to identify pricing activities. Here, the linear function (4.6) is used. Em denotes the coefficient of elasticity. 

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Goebel, D. J., Marshall, G. W., and Chairman, W. B. L (2004), "An organizational communication-based model of individual customer orientation of nonmarketing members of a firm," Journal of Strategic Marketing, 12 (1), 29-56. 

Today, there are more and more companies that continually look for competitive advantages in order to get a better position in the market. One way may be by aligning strategic/tactical decisions toward the optimization of an overall business performance metric. In this chapter, it is presented a novel approach to address this challenge. A MINLP model is developed, which addresses the network design and strategic marketing decisions of the SC in tandem. Then, this model is coupled with the financial formulation presented in Chap. 2, which allows the calculation of shareholders value by the discounted-free-cash-fiow method (DFCF). 

The flexibility in the petrochemical industry production and the availability of many process technologies require adequate strategic planning and a comprehensive analysis of all possible production alternatives. Therefore, a model is needed to provide the development plan of the petrochemical industry. The model should account for market demand variability, raw material and product price fluctuations, process yield inconsistencies, and adequate incorporation of robustness measures. 

Depending on the business model(s) chosen, companies need to define their specific innovation headroom . This includes answering questions such as how important are innovations in the segment What do strategic customers need Should companies go for innovation in technology, service offerings, or in the value chain What does that imply for R D capacities and skills How can R D best collaborate with marketing and sales, (potential) customers, and external research institutes What level of external versus internal R D is required ... 

This produced a list of strategic options different business models and value chain positions that would match the most attractive areas. These options were then assessed by a set of criteria that included economic value, feasibility, risk, investments, and fit with the overall strategy and portfolio of initiatives. To test the economic viability of individual products, specific business ideas related to single products/markets were written and pressure-tested. The final decision was made after extensive discussions and more than 80 interviews with experts. While such interviews are essential, it is also important to remain skeptical and avoid the common wisdom trap. It is too early to determine the financial success, but the company has already achieved alignment between the overall strategy, the level of investment, and the organizational setup. 

Second, modelling of strategic behaviour tends to capture qualitative effects, but the quantification typically requires stronger assumptions. For example, market design of transmission or balancing markets can have a significant impact on opportunities to exercise market power by strategic players. 

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