Full text available at: http://dx.doi.org/10.

1561/1700000022

Marketing Decision Making

and Decision Support:
Challenges and Perspectives
for Successful Marketing
Management Support Systems
 Full text available at: http://dx.doi.org/10.1561/1700000022

Marketing Decision Making

and Decision Support:
Challenges and Perspectives
for Successful Marketing
Management Support Systems

Gerrit H. van Bruggen

Erasmus University Rotterdam
The Netherlands
[email protected]

Berend Wierenga
Erasmus University Rotterdam
The Netherlands
[email protected]

Boston – Delft
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Foundations and Trends

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Marketing Decision Making and Decision Support: Challenges and Perspectives for
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Foundations and Trends R

in
Marketing
Volume 4 Issue 4, 2009
Editorial Board

Editor-in-Chief:
Jehoshua Eliashberg
University of Pennsylvania

Co-Editors
Teck H. Ho
University of California Berkeley
Mary Frances Luce
Duke University

Editors
Joseph W. Alba, University of Florida
David Bell, University of Pennsylvania
Gerrit van Bruggen, Erasmus University
Pradeep Chintagunta, University of Chicago
Dawn Iacobucci, University of Pennsylvania
Brian Sternthal, Northwestern University
J. Miguel Villas-Boas, University of California, Berkeley
Marcel Zeelenberg, Tilburg University
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Editorial Scope

Foundations and Trends R

in Marketing will publish survey and
tutorial articles in the following topics:

• B2B Marketing • Marketing Decisions Models

• Bayesian Models • Market Forecasting
• Behavioral Decision Making • Marketing Information Systems
• Branding and Brand Equity • Market Response Models
• Channel Management • Market Segmentation
• Choice Modeling • Market Share Analysis
• Comparative Market Structure • Multi-channel Marketing
• Competitive Marketing Strategy • New Product Diffusion
• Conjoint Analysis • Pricing Models
• Customer Equity • Product Development
• Customer Relationship • Product Innovation
Management • Sales Forecasting
• Game Theoretic Models • Sales Force Management
• Group Choice and Negotiation • Sales Promotion
• Discrete Choice Models • Services Marketing
• Individual Decision Making • Stochastic Model

Information for Librarians

Foundations and Trends R
in Marketing, 2009, Volume 4, 4 issues. ISSN paper
version 1555-0753. ISSN online version 1555-0761. Also available as a com-
bined paper and online subscription.
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Foundations and Trends R

in
Marketing
Vol. 4, No. 4 (2009) 209–332

c 2010 G. H. van Bruggen and B. Wierenga
DOI: 10.1561/1700000022

Marketing Decision Making and Decision

Support: Challenges and Perspectives for
Successful Marketing Management
Support Systems

Gerrit H. van Bruggen1 and Berend Wierenga2

1
Rotterdam School of Management, Erasmus University Rotterdam, The
Netherlands, [email protected]
2
Rotterdam School of Management, Erasmus University Rotterdam, The
Netherlands, [email protected]

Abstract
Marketing management support systems (MMSS) are computer-
enabled devices that help marketers to make better decisions.
Marketing processes can be quite complex, involving large numbers
of variables and mostly outcomes are the results of the actions of many
different stakeholders (e.g., the company itself, its customers, its com-
petitors). Moreover, a large number of interdependencies exist between
the relevant variables and the outcomes of marketing actions are sub-
ject to major uncertainties. Given the complexities of the market place,
marketing management support systems are useful tools to help the
marketing decision makers carry out their jobs. Marketing manage-
ment support systems can only be effective when they are optimally
geared toward their users. We, therefore, deal with decision making
 Full text available at: http://dx.doi.org/10.1561/1700000022

in marketing (which generates the need for marketing management

support systems). We discuss how marketing decisions are made, how
they should be made, and the relative roles of analytical versus intu-
itive cognitive processes in marketing decision making. We also discuss
the match between marketing problem-solving modes and the various
types of marketing management support systems. Finally we discuss
how the impact of MMSS can be improved. This is important, given
the current under-utilization of MMSS in practice. We discuss the con-
ditions for the successful implementation and effective use of market-
ing management support systems. The issue ends with a discussion of
the opportunities and challenges for marketing management support
systems as we foresee them.
 Full text available at: http://dx.doi.org/10.1561/1700000022

Contents

1 Marketing Processes, Marketing Decision Makers,

and Marketing Management Support Systems:
Introduction to the Issue 1

1.1 The History of Marketing Management

Support Systems 5
1.2 Content of This Issue 8

2 Decision Making in Marketing 9

2.1 Descriptive Approaches to Marketing Decision Making 9
2.2 Normative Approaches to Marketing Decision Making 12
2.3 Non-Routine Decision Making: Satisficing
versus Optimizing 15
2.4 Dual-Process Decision Making 19

3 The ORAC Model of Marketing

Problem-Solving Modes 23
3.1 Optimizing 23
3.2 Reasoning 26
3.3 Analogizing 27
3.4 Creating 29
3.5 Drivers of Marketing Problem-Solving Modes 31

4 Marketing Management Support Systems (MMSS) 39

4.1 The Components of Marketing Management
Support Systems 39

ix
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4.2 Different Types of Marketing Management

Support Systems 40
4.3 Developments in Marketing Models2 45
4.4 Artificial Intelligence (AI) and Marketing 48
4.5 New Types of Marketing Management
Support Systems 52
4.6 The Match Between Marketing Problem-Solving Modes
and Marketing Management Support Systems 61

5 How Do Marketing Management Support Systems

Support Marketers? 67

5.1 Marketers’ Cognitive Limitations in Data Processing 68

5.2 Combining Managerial Judgment and Marketing
Management Support Systems 68
5.3 How Should a Marketing Management Support System
Support a Marketer? 70
5.4 The Effectiveness of Marketing Management
Support Systems 71
5.5 Empirical Studies on the Effectiveness of Marketing
Management Support Systems 73

6 Implementing Marketing Management

Support Systems 81
6.1 What Drives the Impact of Marketing Management
Support Systems? 82
6.2 Dynamics in MMSS Perceptions 97

7 Perspectives for Marketing Management Support

Systems 101

References 109
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1
Marketing Processes, Marketing Decision
Makers, and Marketing Management Support
Systems: Introduction to the Issue

This issue of Foundations and Trends in Marketing addresses the topic

of marketing management support systems. In brief, marketing man-
agement support systems (MMSS) are computer-enabled devices that
help marketers to make better decisions (a more elaborate definition fol-
lows later). As shown in Figure 1.1, marketing decision making involves
three important entities: marketing processes, the marketing decision
maker, and the marketing management support system. Marketing
processes (left box of Figure 1.1) comprise the behavior and actions
of customers, resellers, competitors, and other relevant parties in the
marketplace. Marketing decision making implies interfering in these
marketing processes with the purpose of influencing them in a way
that serves the objectives of the company. In principle, marketers use
the instruments of the marketing mix for this purpose; they offer prod-
ucts, carry out advertising and other promotional activities, they set
prices and choose distribution channels through which the products
are marketed. Marketing processes can be quite complex, involving
large numbers of variables and mostly their outcomes are the results
of the actions of many different stakeholders (e.g., the company itself,
its customers, its competitors). Moreover, usually, a large number of

1
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2 Introduction to the Issue

Fig. 1.1 Marketing processes, the marketing decision marker, and the marketing manage-
ment support system.

interdependencies exist between the relevant variables and the out-

comes of marketing actions are subject to major uncertainties. Finally,
to make things even more complicated, marketing processes do not take
place in isolation, but within the broader context of the economy and
the society at large. Given these complexities of the marketplace, mar-
keting management support systems are needed to help the marketing
decision makers carry out their jobs.
The marketing decision maker (represented by the central box in
Figure 1.1) receives a constant stream of data about marketing pro-
cesses with respect to the products and brands she/he is responsible
for. Marketers use these signals to monitor what is going on, they try to
interpret this information to understand the underlying mechanisms of
the observed phenomena in the market, and use the resulting insights
to take appropriate actions. Usually, marketing decision makers bring
an impressive set of assets to the table. They possess knowledge about
marketing phenomena, experience with marketing processes in prac-
tice, specific knowledge (e.g., industry-specific expertise), and a good
deal of intuition. All these elements can be deployed to convert the
information about marketing processes into effective decisions. How-
ever, at the same time, marketing decision makers are also constrained
by serious limitations. Perhaps the most severe limitation is time. It is
well-known that managerial activity is characterized by brevity, variety,
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and discontinuity (Mintzberg, 1973), and marketing management is no

exception. In their day-to-day decision making marketing managers
have to allocate their time over a large number of different problems,
which makes it extremely difficult to pay concentrated attention to
each individual problem. Another limitation is cognitive capacity. As
a human being, a marketing decision maker is able to process only a
limited amount of information and to consider only a limited number
of alternative solutions for a problem at the same time (Miller, 1956).
Again, being humans, marketing decision makers are subject to biases,
may suffer from overconfidence, and get tired, bored and emotional
(Hoch, 2001). Usually it is not sufficient for marketing decision makers
to just look at the data and “Let the data speak” is often a too simplis-
tic advice. Analysis is needed to develop insight into the causes of the
observed events. For example, why do we see a sudden drop in market
share in country X?; why is the performance of this new product so far
below the prognosis? To answer such questions, marketers need help
from sophisticated decision aids.
This takes us to the core topic of this issue: the marketing manage-
ment support system, as shown upper-center in Figure 1.1. Marketing
management support systems (MMSS) enhance the decision making
capabilities of marketers, by improving their efficiency (saved time) as
well as their effectiveness (better decisions). As shown in Figure 1.1, a
marketing management support system is fed with data about the pro-
cesses in the marketplace, is in constant interaction with the marketing
decision maker, and its output has impact on marketing decisions and
marketing actions. The influence of an MMSS1 on marketing decisions
can be either direct, that is when specific decisions are completely left
to the MMSS (=marketing automation) or indirect, that is when mar-
keters take the output of the MMSS into account when making their
decisions. As we will see later, at this point in time the indirect way is
by far prevalent. Marketing automation is only possible in very specific
situations. Marketing decisions and actions, incorporating the influence

1 Throughout this issue we use the acronym MMSS for the singular (marketing management
support system), as well as for the plural (marketing management support systems).
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4 Introduction to the Issue

of the MMSS, in turn affect the processes in the marketplace. This is

shown by the feedback loop in Figure 1.1.
A marketing management support system can perform different
roles. An MMSS can primarily act as a data repository, which is a device
that monitors events and provides information about these events to
decision makers in such a way that they can easily use it. In this role the
MMSS answers the “what happened?” question. A more sophisticated
MMSS can help detecting cause–effect relationships between events in
the marketplace. The MMSS answers the “why did it happen?”. For
example, did we sell so much more because our sales-promotion cam-
paign was extremely effective, or because the competitor reduced the
size of its sales force? Next, an even more sophisticated MMSS can
consider alternative marketing actions and predict the (conditional)
outcomes of these actions. Such an MMSS is able to answer “what-
if ? ” questions. For example, what happens to our sales and profit if
we would increase the advertising budget with x%? Finally, an MMSS
reaches the highest level of sophistication and functionality when it
answers the “what should happen?” question. “Should we introduce this
new product or should we increase our advertising budget with 50% in
order to realize our profit target?” are examples of such questions.
MMSS in practice almost always contain a database and the func-
tionality to retrieve data from it. Data are needed for answering the
“what” question. In addition an MMSS can contain models which are
needed for the analysis of cause-and-effect relationships, for simula-
tions, and for optimization. These are the higher functionality levels of
an MMSS. A marketing management support system is not limited to
containing quantitative data only. It can also contain qualitative data
in the form of knowledge and expertise, for example, in the form of
if-then rules in marketing expert systems. The interaction between the
marketing decision maker and the MMSS can take different forms. In
a very basic form the MMSS sends periodic information to the deci-
sion maker, for example, figures about sales, market shares, and profits
per month, per week, or even per day. Often, the user can drill down
in this data, for example, to look at specific customers groups, spe-
cific channels, or specific geographical areas. In an interactive way, the
marketing decision maker can also ask specific questions to the MMSS,
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1.1 The History of Marketing Management Support Systems 5

about facts (what) or about the relationship between marketing instru-

ments and sales (why). Furthermore, as described above, the marketer
can also ask the system to carry out simulations (what-if) or to provide
recommendations (what should). Examples of the latter are recommen-
dations for the optimal advertising budget in a fast-moving consumer
good company (Little, 1970) or for the best movie schedule in a movie
theatre (Eliashberg et al., 2009a).
Relative to other management areas such as finance and opera-
tions management, marketing is a domain where human experience
and expertise have always played an important role. Many marketing
processes are weakly structured and require a good deal of human judg-
ment. Although in this issue we do discuss marketing decisions that can
be automated (e.g., in the domain of CRM), many marketing decisions
calls for a combination of the judgment, intuition, and expertise of the
manager and the analytical capabilities of the MMSS. The best perfor-
mance in the marketplace will be obtained when the strengths of both
models and intuition are used (Hoch, 2001). In Section 5 we discuss in
more detail how the combination of the marketing decision maker and
MMSS improves the performance of marketing decision makers.

1.1 The History of Marketing Management

Support Systems
The idea of designing systems and models to assist marketers’ decision
making dates back to over forty years. In (1966), Kotler introduced the
concept of a “Marketing Nerve Centre,” providing marketing managers
with “computer programs which will enhance their power to make deci-
sions.” The first of these systems were marketing information systems
(Brien and Stafford, 1968). The computers that were introduced at that
time in companies produced lots of data and a systematic approach was
needed to make those data available in a way such that managers could
effectively use them for decision making. There was a serious danger
of overabundance of irrelevant information (Ackoff, 1967). About ten
years later, Little (1979b) introduced the concept of marketing deci-
sion support systems. He defined a marketing decision support sys-
tem (MDSS) as a “coordinated collection of data, systems, tools and
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6 Introduction to the Issue

techniques with supporting software and hardware by which an orga-

nization gathers and interprets relevant information from business and
environment and turns it into an environment for marketing action”
(p. 11). Little’s (1979b) concept of an MDSS goes much further than a
marketing information system. Important elements are models, statis-
tics, and optimization, and the emphasis is on response analysis; for
example, how sales respond to promotions. In Little’s view, MDSS were
suitable for structured and semi-structured marketing problems, had a
quantitative orientation and were data-driven.
Almost two decades later, Wierenga and Van Bruggen (1997) pre-
sented a classification of marketing decision support technologies and
tools, and used the term “Marketing Management Support Systems”
to refer to the complete set of marketing decision aids. In addi-
tion to the data-driven marketing management support systems as
defined by Little (1979b), marketing management support systems
also include knowledge-driven systems aimed at supporting market-
ing decision making in weakly structured areas. Data-driven MMSS
use quantitative data analysis techniques and econometric and opera-
tions research models. Knowledge-driven MMSS systems use technolo-
gies from Artificial Intelligence (AI) such as expert systems, analogical
reasoning, and case-based reasoning and have been developed more
recently (Wierenga et al., 2008). We provide an overview of the differ-
ent marketing management support systems in Section 2.
Since the introduction of the first generation of marketing
management support systems the conditions for using these sys-
tems in companies have greatly improved. The main reason for this
is the enormous progress in information technology. Today, almost
every marketing decision maker works in an IT-supported environ-
ment and is directly and continuously connected to databases with
information about customers, sales, market shares, distribution chan-
nels, and competitors. Many companies interact directly and contin-
uously with customers and prospective customers through multiple
channels like the internet, mobile devices, call centers, and physical
stores. All of these interactions generate customer data. The stored
customer data concern very detailed information about all phases of
customers’ purchasing processes from individuals’ information search
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1.1 The History of Marketing Management Support Systems 7

and transactions activities to post-purchase information and service

requests. Increasingly, data are collected at a very disaggregate level.
This means that it is possible to collect data for each individual cus-
tomer for every activity this person undertakes at each point in time.
Similarly, information technology has made it possible in many markets
to continuously track the behavior and the marketing activities of com-
petitors. Increased computer storage capacities allow for the storage of
all of these data and increased processing capacities make it possible
to analyze these data (in real-time). Decision support models, increas-
ingly, run real-time and provide instant support about which marketing
activity to undertake for a particular customer in a specific situation
(Reinartz and Venkatesan, 2008).
When we look at the use of MMSS in practice, we observe that the
information retrieval function of MMSS, related to the “what” question
mentioned earlier, is used quite extensively. However, this is much less
the case for other, more advanced and sophisticated functionalities of
MMSS. As a consequence, the impact of marketing management sup-
port systems in practice is lower than its potential. About ten years
ago, Bucklin et al. (1998) presented an optimistic view on the impact
of decision support systems in marketing. They argued that a grow-
ing proportion of marketing decisions could not only be supported but
might also be automated. They foresaw that close to full automation
would ultimately take place for many decisions about existing prod-
ucts in stable markets. However, even in established markets such as
for consumer-packaged goods, marketing automation has not taken off
yet. Interestingly, in quite different industries, those where the Cus-
tomer Relationship Management (CRM) approach has taken hold (e.g.,
financial services, telecommunication, (former) catalogue companies),
we now do see the realization of marketing automation. In companies
in these industries computers decide, for example, which customers will
receive a specific offer and which customer will not. However, MMSS
offer many more possibilities and there must be reasons why companies
do not use MMSS to their full capacity yet. It is important to identify
potential barriers so that these can be removed.
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8 Introduction to the Issue

1.2 Content of This Issue

In this issue of Foundations and Trends in Marketing we focus on the
center part of Figure 1.1. The main subject is marketing management
support systems. Since these systems can only be effective when they
are optimally geared toward their users, we also address the users of
these systems, the marketing decision makers, as well as the interaction
between MMSS and their users.
Section 2 deals with the demand side and deals with decision making
in marketing (which generates the need for decision support system).
We discuss how marketing decisions are made, how they should be
made, and the relative roles of analytical versus intuitive cognitive pro-
cesses in marketing decision making. Section 3 discusses the ORAC
classification of marketing problem-solving modes. The next section
(Section 4) discusses marketing management support systems in detail.
What different types of MMSS exist and how have they developed over
time? Marketing management support systems constitute the supply
side of marketing decision support. In Section 4 we also discuss the
match between marketing problem-solving modes and the various types
of marketing management support systems. In Section 5 we discuss
how MMSS support marketing decision makers and reflect on the best
way of combining the strengths of the human decision maker with the
strengths of the computer. We also address the impact of MMSS; what
are the documented effects of MMSS on decision making? Section 6
discusses how can we improve the impact of MMSS. This is important,
given the current under-utilization of MMSS mentioned before. We dis-
cuss the conditions for the successful implementation and effective use
of marketing management support systems in practice. This issue ends
with a discussion of the opportunities and challenges for marketing
management support systems as we foresee them.
 Full text available at: http://dx.doi.org/10.1561/1700000022

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