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In marketing mix modeling, what kind of models do you prefer to use, stochastic or deterministic? why?

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تاريخ النشر: 2016/02/02
Katarzyna Sligowska
من قبل Katarzyna Sligowska , Product Expert , Mango-Media

Well, to answer in short, simple way, we can start from defining Marketing Mix Model which is analytical approach that uses historical information to quantify sales impact of various marketing activities; it specifies effectiveness of marketing elements in terms of its contribution to sales - volume, volume/effort, sales/cost and ROI.

 

Knowing that I would say - it depends on industry and nature of products. E.g. for FMCG industry - I would go for stochastic, on the other hand for banking/insurance - deterministic. 

Using deterministic model can be very hard at certain product stages or particular markets. But I believe we should endeavour to perfection at every aspect. 

Ahmed Mohamed Ayesh Sarkhi
من قبل Ahmed Mohamed Ayesh Sarkhi , Shared Services Supervisor , Saudi Musheera Co. Ltd.

 Full agree with MRS Katarzyna in her answer

 

 

Vinod Jetley
من قبل Vinod Jetley , Assistant General Manager , State Bank of India

Our world is full of models:

  • a map is a model of a location, which can help us get from place to place.
  • sheet music is a written model of the sound which can make a song
  • a bus timetable is a model of where buses should appear
  • a company’s financial reports are a model of one aspect of the company
Deterministic models

A deterministic model assumes certainty in all aspects. Examples of deterministic models are timetables, pricing structures, a linear programming model, the economic order quantity model, maps, accounting.

Probabilistic or stochastic models

Most models really should be stochastic or probabilistic rather than deterministic, but this is often too complicated to implement. Representing uncertainty is fraught. Some more common stochastic models are queueing models, markov chains, and most simulations.

For example when planning a school formal, there are some elements of the model that are deterministic and some that are probabilistic. The cost to hire the venue is deterministic, but the number of students who will come is probabilistic. A GPS unit uses a deterministic model to decide on the most suitable route and gives a predicted arrival time. However we know that the actual arrival time is contingent upon all sorts of aspects including road, driver, traffic and weather conditions.

Hussan Syed
من قبل Hussan Syed , Senior Marketing Manager , M.H Alshaya

A lot of variables to consider here. Depends on the industry, the stage of the product life cycle, the market, the product/service etc. Using the BCG matrix, cash cows tend to be built on deterministic platforms where things have been tried and tested. Rising stars on the other hand have a lot more unknowns to deal with so the stochastic method may work better. We are currently going through a epoch defining change both in the business and marketing world. Where disrupters are to be found everywhere and experience can actually be a hindrance rather than a help. Most startups and new tech companies would therefore adopt the stochastic approach to their marketing especially with the advent of the LEAN system.

suresh KUMAR
من قبل suresh KUMAR , Chief Technology Officer (CTO) , Mundo Startel SA

Some fields predominantly use stochastic models, others mainly use deterministic models. In between there are many modeling techniques that introduce some sort of uncertainty but do not amount to a full-fledged stochastic model.

Hazem Mohamed Abdelhafez
من قبل Hazem Mohamed Abdelhafez , مبيعات داخلي , HyPeR oNe

I agree ð for your answers

Saleem Ahmed
من قبل Saleem Ahmed , Sales Manager , VIP GROUP FZCO

Wel I Wil prefer deterministic because it attract the customers and best describe the value in the market.

Hisham hany
من قبل Hisham hany , القاهرة , جلاسكو

 deterministic becouse it give us ruels wich we need to to prove our good work

Asad khan
من قبل Asad khan , Product specialist , shaigan pharmaceutical

I prefer deterministic coz the attributes used here r not random.

د Waleed
من قبل د Waleed , Management - Leadership-Business Administration-HR&Training-Customer Service/Retention -Call Center , Multi Companies Categories: Auditing -Trade -Customer service -HR-IT&Internet -Training&Consultation

I would agree with the answers... Helpful and right info ... Thank You

Omar Saad Ibrahem Alhamadani
من قبل Omar Saad Ibrahem Alhamadani , Snr. HR & Finance Officer , Sarri Zawetta Company

Agree with all answers above .

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