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This
columnist isn’t a good mathematician, and swears it
couldn’t be happening. But because of the high spirits
soaring during the 3rd World Sudoku Championship recently
held in Goa, India, of which this columnist was part of
the Philippine team (not as a participant but as mere
observer), perhaps marketing by mathematics as a topic
could be better than solving the Sudoku.
One
doctorate tells of a former business associate, who
constantly used computers, to ask the question: “What
if…?” He explained to his associate: “I can ask the
computer without starting a rumor. If I went to the
controller and asked what would happen to our profits if
we dropped a certain product line, it would be all over
the plant before lunch that we are getting ready to go of
that particular business.”
Mathematical models that stimulate a market or duplicate a
marketing situation could well be the ultimate
contribution to marketing. This translates into savings of
money, accuracy, speed and “doing things not otherwise
possible.” It has been said that model-building and
simulation is perhaps the most significant of those things
not otherwise possible without a computer. Most experts
say a computer is a devise that can handle variable on top
of variable and give management a choice of alternatives
while there’s still time to make a decision. But already
models are regulating some marketing programs.
Models
were at the root of all hoopla in ad-agency circles years
ago about using computers to select media. The intention
was to stimulate a market area, and then test the exposure
gained by differing combinations of media buys. The
problem, to a large extent, was proper data. In one
agency, accumulation of demographic and economic data for
one account showed a wide-open area for a new product. In
another agency, the collection of data showed that the
agency’s principal client should have very high regard on
its print schedule. The publication has never made a
presentation to the agency—and the client is not yet ready
to concede that his customers have such reading tastes.
The
agencies are still far from satisfied with the data that
can be obtained. The biggest hole pointed out by a top
honcho in the ad industry: “What happens when people are
exposed to an ad?” The agencies, meanwhile, are doing they
can with what they have. Now, more than ever, agencies
continue to build models closer and closer to reality. And
at several agencies, work should stimulate test markets.
Advertising practitioners have always presumed that what
they do is more art than science. So it may seen strange
that all of the larger agencies now have people practicing
operations research, which is presumed to be a science—the
science of management. In reality it is not strange at
all, for part of operations research deals with weighing
of alternatives—and the ad man may have more numeric
alternatives to deal with than anybody.
A media
man with one ad and 30 media where he can spot it can be
confronted with one more than 1 billion combinations. The
computer runs quickly through those combinations and weed
out the obviously worthless.
What
combinations remain is subject to management decision. The
example used is in advertising, but it could just as well
be in other marketing functions. Throughout marketing
these days you are finding the computer used to weed out
the obviously worthless things to do, leaving management
with only few alternatives to consider—sometimes, even,
alternatives leading to a go or no-go decision.
Decisions
involve determining the proper allocation of a company’s
total resources—in other words, research. Only now are the
numbers so necessary for operations research being
assembled for the marketing function, for only now is
there a way to work with them: the computer. Says an
award-winning ad man: “When we add marketing to our
collection of trophies, we will be able to build models of
total business systems.”
The way
marketing data are being used indicates some changes the
future brings. | 
