This 15-minute video tutorial is based on our recent webinar on marketing mix modeling with Bayesian networks and BayesiaLab.
To many business executives marketing mix models remain shrouded in mystery. There are many advertising agencies and market research companies – plus countless online media firms – who each promote their particular marketing mix model in an effort to support marketing decision makers. However, there is a remarkable lack of universally accepted and standardized methods that marketing practitioners can draw upon. In fact, performing a search for books on Amazon.com regarding “marketing mix models” yields only three relevant titles and, as it turns out, they are mostly geared towards an academic audience. In contrast to the sparse array of books, there is no shortage of academic papers on all aspects of marketing mix modeling. Without doubt, many of these peer-reviewed journal articles have progressed the field of marketing science, but the advanced and often abstract nature of the proposed methods keep them far removed from practical implementation.
Given this lack of textbook references in this field, plus the mostly inaccessible nature of the academic literature, decision makers have to rely almost exclusively on the persuasion skills of research vendors in determining the practicality and validity of any proposed marketing mix model.
Marketing models based on Bayesian networks are not automatically a solution to this quandary, but their inherently visual nature plus their computational transparency make them much more accessible to a broad range of stakeholders. To interpret and validate a Bayesian network requires, most importantly, a “common sense” understanding of the domain and not necessarily a degree in statistics.
It is our objective to use the framework of Bayesian networks plus the features of the BayesiaLab software package to build scientifically sound marketing mix models that can be implemented by many and interpreted by all. More specifically, we will focus on how to evaluate marketing mix models with some of the analysis functions in BayesiaLab and to derive policy recommendations and priorities for decision makers.