7. Multiple Regression in Marketing-Mix Models

Introduction

The movie Moneyball has a lot to teach us about optimizing a company’s marketing mix. In the movie, the management of the Oakland Athletics discovers that the baseball team can get ahead by changing its perspective and looking at data differently than its competitors.

The A’s know most major-league teams use batting average (hits over real opportunities) as the prevailing metric for determining the worth of a hitter. Traditional wisdom says, “You hit more, you win more.” So the players who have more hits per at bat1 are generally the most sought after and are paid the most money. But by examining the outcome of decades of baseball games, the A’s find a variable they believe to be more ...

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