Abstract:

This paper describes the paradigm shift that has been occurring in the statistical analysis of marketing data over the past 10 years. The new paradigm reflects a perspective on probability that was first proposed in the 18th century by Thomas Bayes, an English clergyman. These new methods of analysis offer better solutions to a wider range of marketing problems than classical statistical methods. After a brief introduction to the Bayesian view of probability, the paper discusses the potential impact of Bayesian analysis on managerial decision-making. Two case studies demonstrate the power of these methods for understanding and predicting consumer behavior.