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Game Theory for Marketing Tactics

Game theory has many applications, whether it be in politics, economics, computer science, or social science. This article argues the need to apply game theory in marketing. Currently, marketing strategies mainly are ones of the “tried-and-tested” principle, where marketers try to target emotions rather than logic. On the contrary, game theory looks into the mathematical, strategic ways in which rational decision-makers behave. While game theory marketing may have been nearly impossible just a few decades ago, it is easily feasible today because of the sophisticated ways in which we can analyze big data. Because game theory studies the track record of rational decision-makers, applying the idea to marketing means studying the decisions customers make on their buying journey. As each purchase is made, data is collected and the more we know about that customer’s purchases, the easier it is to predict future purchases. It is impossible to really predict customers’ purchases because marketers tend to target a mass group by trying to evoke a certain emotion, but it is widely known that advertising money is vastly wasted many times.

Perhaps the problem with using game theory in marketing is the fact that game theory analyzes rational decision-makers, and many people buy on impulse and emotion. Socioeconomic status, age groups, ethnic backgrounds, and so many factors that cannot be quantified or predicted go into purchase decisions of customers, and sometimes, purchases are made with no rational reasoning, making game theory applications thoroughly unreliable in these cases. Additionally, another issue is that marketing is not only to promote products, but also to increase positive publicity, but game theory totally ignores this necessity of effective marketing. It is questionable whether focusing on prediction and logic is more effective than targeting desires and emotions. Game theory can be used to provide a logical prediction of the decisions that members of a network, in this case, customers, will make. The article’s author reasons that so far, it might be the most effective tactic, since previous marketing strategies are not very reliable.


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September 2018