“Bayesian Decision Theory in Marketing Research”-An Analysis of Bayes Theorem in Marketing Decision Making

This article is an attempt to explain the rudiments of the Bayesian approach and its potential applicability to marketing decisions. First the major aspects of the theory will be discussed in terms of simple illustrations. Second, an illustrative decision problem associated with the marketing area will be outlined and the use of Bayesian theory in its resolution described. Finally the advantages and limitations of the Bayesian approach in dealing with the complexities of real-world problems will be discussed and some speculative comments offered regarding the future use of these techniques in business. A list of source readings is provided at the end of this article for the reader who wishes to explore the subject in more detail.