Using game theory in marketing.
The following article by Nick Chowdrey was able to contextualize the relationship between Game Theory and marketing, and I’d have to say it is one of my favorite articles I’ve read this year. In today’s business world, several industries rely on marketing/advertisement to stay competitive as many companies can’t or aren’t able to differentiate enough. As a result, the companies focus on having the perception of being a superior product or service. That being said, marketing has its players (companies within the same industry), its playing field (consumers), and its method of scoring (increase in sales/consumers’ attention).
Though, as we’ve seen in lecture, Game Theory is successful when players are rational, the marketing industry is affected by many irrational factors as it is dealing with consumers and their opinions/feelings towards a product or service. So the article concludes that marketing, in its barest form is impossible to apply game theory to; though, it is still possible to rationalize things and allow us to quantify markets to allow game theory to be applied. Certain products created to aid marketing professionals in leading their customers “down a controlled path” so that consumers can be somewhat predictable. The more we narrow down the interests of the consumer, the easier it is to predict and, therefore, know how to appeal to their tastes better. Furthermore, narrowing down allows for logic and evidence (A/B testing) to play a role in maximizing probability to further support predictions.
http://www.marketingmagazine.co.uk/article/1309753/playing-game-theory-marketing-tool