Moving Beyond Intuition: Managing Allocation Decisions in Relationship Marketing in Business-to-Business Markets

Developing and estimating structural models is becoming a routine practice in marketing. In this study, the possibilities of applying such models in managerial decision making under uncertainty are investigated. In particular the feasibility of exploiting the inherent probabilistic nature of structural models to buttress decision making is demonstrated. The approach is based on making heavy use of standard simulation routines. The model that is under scrutiny describes the relationships between firms' efforts in three areas (the offer, customer relationships, and market positions) on the success of a new product introduction. Special attention is given to the aspect of risk aversion. Accounting for the risk attitude implies different allocation decisions for risk-averse compared to risk-prone managers, in line with common sense