Marketing is all about taking money from customers (an application of Tobit model)

Hasan, Syed Akif and Subhani, Muhammad Imtiaz and Osman, Ms. Amber (2011): Marketing is all about taking money from customers (an application of Tobit model). Forthcoming in: International Research Journal of Finance and Economics

Abstract

One of the key dimensions of business is marketing and when we say marketing we talk about creating more revenue every second. Sales are an important key to success for revenue generation and for this purpose various marketing strategies have been developed. Sales are always driven by customers/consumers, and this thought is in practice since the inception of the concept of business. This paper is an appreciation on the comprehension of various marketing strategies (i.e. Single Segment Strategy, Differentiated Strategy, Un Differentiated Strategy, Product Development, Establishing The Brand, Innovation strategy, Market Growth Shares, Porter Cost Leadership, Market Expansion, Pricing, Diversification), which only aim at generating revenues while proposing the Tobit model to assess the relationships of outlined various marketing strategies with the revenue generation (sales of the products/ services). The comprehensive findings of this research reveals that all strategic means are important for generating revenues in relevance to the products/ services which are being offered and confirms that all outlined marketing strategies are designed and configured with the intent to grab the money from every pocket, but single segment strategy and market growth share strategy matter the most in this connections. Whereas, the Tobit model is revealed as an appropriate and robust model to predict the outlined relationship.

• Item Type: MPRA Paper
• Language: English
• Keywords: Marketing Strategies, Sales, Customer Relationship, Marketing, Revenue, Tobit Model
• Subjects: C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M30 - General; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

References

Amemiya, T. (1973). Regression analysis when the dependent variable is truncated normal, Econometrica (The Econometric Society), 41 (6): 997–1016, doi:10.2307/1914031.

Bagozzi, R., P. (1988), Marketing as an Organized Behavioral System of Exchange. Journal of Marketing.

Chung, C., F. & Goldberger, A., S. (1984). Proportional Projections in Limited Dependent Variable Models. Econometrica. 52, 531-534.

Corner, I. & Hinton, M. (2002). Customer relationship management systems: implementation risks and relationship dynamics. Qualitative Market Research: An International Journal.

Fjermestad, J. & Romano, N. (2004). Electronic customer relationship management. Revisiting the general principles of usability and resistance – an integrative implementation framework. Business Process Management Journal.

Fornell, C. (2002). Consumer spending should rebound as customer satisfaction holds steady in manufacturing durables and e-business, ACSI Press release, August 19 (http://www.theacsi.org/press_release/0802q2.pdf).

Greene, W., H. (1981). On the Asymptotic Bias of the Ordinary Least Squares. Estimator of the Tobit Model. Econometrica. 49, 505-514.

Goldberger, A. S., (1981). Linear Regression after Selection. Journal of Econometrics. 15, 357-366.

Gurău, C. (2005). Customer-Centric Strategic Planning: Integrating CRM in Online Business Systems Information technology and management.

Maynard, R. (1995). Launching Your Product Nation's Business. Retrieved August, 2011 from http://findarticles.com/p/articles/mi_m1154/is_n8_v83/ai_17305960/

McDonald, J., F. & Moffitt, R. A. (1980). The Uses of Tobit Analysis. The Review of Economics and Statistics, MIT Press, 62(2), 318-21.

Olsen, R. (1978). A note on uniqueness of maximum likelihood Estimator in Tobit Model. Econometrica, 46, 1211-1215.

Rust, J. (1997). Using Randomization to Break the Curse of Dimensionality. Econometrica, Econometric Society, 65(3), 487-516.

Tobin, J. (1958). Estimation of relationships for limited dependent variables. Econometrica (The Econometric Society) 26 (1): 24–36.doi:10.2307/1907382. JSTOR 1907382