When it comes to marketing, companies are always looking for ways to reach the right customers and waste less money on people who aren’t interested.
That’s where Professor Timothy Gilbride comes in. The professor of marketing at the Mendoza College of Business uses mathematics and statistics to help companies understand their customers. He recently shared some thoughts on innovations in marketing.
Q. How does your work help in marketing efforts?
A. Oftentimes, theories of how people behave can be represented by mathematical formulas; for instance, how product features and prices relate to consumer choices. To test those theories, we use statistical models that combine the mathematical formulas of how we think people behave with data showing their actual behavior. My research focuses on coming up with methods to test and refine theories of consumer behavior using data from surveys or data collected by firms as part of their normal course of business.
Q. What would be an example?
A. There is often quite a discrepancy between what people say they will do and what they actually do. Let’s say a camera company wants to introduce a new product. It conducts a survey asking people if they would be willing to pay $500 for a camera. Many people say yes, but when you ask them to choose between various cameras, you find they won’t consider any camera over $250, no matter how many features it has. They are screening out anything over $250. A big part of what we do in marketing research is to understand not only what people say they want but also to understand through their behavior what they actually do want. The bigger picture is that I want to help firms understand what people want so they don’t produce products that people don’t want.
Q. What was your role in this research?
A. In this case, other researchers had written down different mathematical formulas representing theories of how consumers might screen out products that were too expensive or had unacceptable features. My contribution was coming up with a statistical method to estimate and test those theories.
Q. Why is that important?
A. Companies always want to target their marketing efforts to the individual. If a customer is only in the market for a minivan, for example, the company will know not to send him a discount on a pickup truck because that customer will not use it. A camera company may find that there is a segment of individual consumers who prefer a simpler, less expensive camera and avoid bringing an expensive feature-laden camera to market. These actions all require an accurate description of what consumers want and how they behave.
Q. How did you apply your work to the topic of children’s health?
A. I worked with two coauthors on a 2010 paper, “Marketing Healthful Eating to Children: The Effectiveness of Incentives, Pledges and Competitions.” My coauthors conducted a field study of elementary and middle school students in 55 schools, testing to see what type of promotional campaign would be most effective in getting children to choose more fruits and vegetables at lunch. Because this was not a laboratory setting but used real kids on real schools, there were some special challenges in analyzing the data. My contribution was to develop the statistical model to make sure we were accurately measuring the results.
Q. What was interesting about your findings?
A. We found that just like in other marketing situations, that promotions are effective. However, the effectiveness of different types of promotions varied depending on the age of the children, largely as predicted by psychological theory. In addition, even 10 weeks after the promotions ended, we found that children continued to choose more fruits and vegetables. That’s the really exciting part of this study.
Q. How is the field of marketing changing?
A. One of the major differences, compared to 40 years ago, is the fact that we have data. Marketing has become a very quantitative discipline. Today’s leaders want data driving their decisions, not instinct.