Relationship Between Mathematics and Digital Marketing

What is Digital Marketing?

Digital Marketing is a part of core of Marketing where we do all marketing efforts using internet. Digital Marketing use digital channels like Social Media, Search Engine, Email and digital assets like to website or app to reach to their potential customers. When a business uses digital mediums to promote their product and service they opt for Digital Marketing.

Is mathematics necessary for Marketing?

Market Research and Analysis:

Have you ever heard about the term Market Research Analyst?

A Market Research Analyst use to gather information from market about consumer and competitor and also try to analyse the position of that company in the market to help that company to take further decisions on their product or services.

Where mathematics involved in Market Research?

Whenever a company is doing market survey or consumer survey to understand their market position, lot of statistics get involved in this.

If a market research analyst doing competitive analysis, he is going to find their pricing strategy, their position in market, brand equity, method of marketing, distribution and customer satisfaction. Now all this data comes in a complex metric format. A skilled mathematician can easily analyze those metrics for a company going to tell what should be their future strategy to beat their competitions.
Predictive analysis is what a company wants to know on the very 1st hand. Using past data on sales or conversion from marketing campaigns a company a Market Research Analyst can predict the future sales of that company.
Again, in a New Product Development Stage Market Research is the most essential part because based on that research a company take a decision whether they are going to launce that product or not. If the analysis or data is wrong company is used to face big loses in Market.

Now if you look at the step how we do Market research for new product statistical analysis and logical thinking is the most important thing which definitely can be done an expert in Mathematics or Statistics.

What are the skills required to be a Market Research Analyst?

· Mathematical Skills: Algebra, Trigonometry, Geometry, Calculus, Mathematical Economics, Statistics

· Management Skills: Sampling Theory, Survey Design, Visualization of Industry overview, Data Analysis

· Technical Skills: Computer science and skills on MS Excel

Source: http://weusemath.org/?career=market-research-analyst

Strategy Development:

Know Your Customers with The Help of Math:

Do you know that metric has a power to tell each and everything about consumer?

Whenever we are doing a consumer survey or getting a data dashboard from Google Analytics or from different social media platform, we use to segment those to get a clear picture about consumer behavior.

We use to segment those metrices in Demographics, locations, how they discovered us, how we have acquired their contact information, their personal interest, their online activity like in which day and they are most active or in which channel they are most active. Again, if it is website in which page, they are spending most of the time, from where they are existing the page, are they coming back to your coming back to your page. All this data come in a metric form, now after analyzing those numbers you have to take the decision how you are going to target your customers.

If it’s a consumer survey then you have to tally all the questions with graph and table and have to understand their choice and preferences and according to that information you will take further decision on future campaign.

Know Your Pricing Strategy with The Help of Math:

If you don’t know how to play with math you can’t get the correct pricing for your product. There are different mathematical tactics available for pricing.

Mark Up: Mark up is the difference between selling price and manufacturing cost of a product.

So, Selling price – Product Cost = Mark-up Amount

Or, Cost + (Cost x Mark-up Percent) = Selling Price

To determine your Mark -up cost you should know your wholesale, overhead and manufacturing cost.

Profit Margin: The profit margin is how much revenue exceeds your cost.

So, (Selling Price – Cost)/Selling Price = Profit Margin

This are two basic metrics you need to know. Apart from that Anchor Pricing, Discount pricing, Loss Leader pricing, inventory management cost, phycological pricing all are involved with it. So, if you want to be a Business Development Strategist you must know Mathematics.

Know how to play with minds with the help of Mathematics:

It seems quite weird that even Psychology has a connection with Mathematics but Psychology is the study of Human behavior. So, Mathematics of Psychology would be a mathematics of Human behavior. The mathematics that is the most compatible with human behavior is statistics. Psychologist have already developed statistical model that simulate certain aspects of behavior. These models can predict human behavior to some extent. Surprisingly these data are used by advertising agencies so that they can play with the mind of their customers.

FOMO: Fear of missing out is one such psychological game was invented by Peter Kozodoy who is partner and chief strategy officer, GEM Advertising. Now different E-Commerce give Flash Sales just to utilize FOMO to get more Business.

Psychological Pricing: Now whenever any company sets any pricing strategies like Premium, Penetration, Economy, Skimming a huge mind game and market research work behind that.

Psychometric Test: Do you think if you running a Business is it enough to know only your customers? No, right! You also need to know about your Employees. That is why almost every company use to take Aptitude and Psychometric test to understand what is going in the mind of their customers.

Know How to calculate Brand Equity with the help of Mathematics:

What is Brand equity?

'Brand equity' is a phrase used in the marketing industry refers to the perceived worth of a brand in and of itself—i.e., the social value of a well-known brand name.

Source: https://en.wikipedia.org/wiki/Brand_equity

We can see that there is various type of Mathematical formula present in market which we can use to determine Brand Equity. For example,

Brand Contribution Method:

It can be represented as an equation as,

BE = K x (Profits from the branded product – profit from the unbranded product in the same category)

Where, BE = Brand Equity

K = Number of times the difference

Brand Knowledge Method:

‘Brand Knowledge’ stands for the sum of brand awareness and brand image. Each of the parameters can be measured on a 1-10 scale where standard measures such as recall, associations or attitudes or users’ image and so on.

A weighted total of these parameters will be the measure of brand equity. The dimensions of Brand Knowledge can be presented in the form of a chart as under for better understanding.

ROI Calculation with The Help of Mathematics:

Return on Investment this is the metric every client will ask from you if you are a Traditional Marketer/Digital Marketer. Whatever money they are giving for promotion that should definitely give them some worth. Here a Digital Marketer is in advantage because he can give an estimation of ROI with the data of previous campaign or a demo campaign where a Traditional marketer required data of market which is little bit complex but, in both cases, mathematical calculation will give you the answer.

Traditionally, ROI = (Revenue – Investment)/Investment

Apart from this there are two more formulas available to calculate ROI,

Vanilla ROI = (Profit – Investment)/Investment

Marketing ROI = (Gross Profit – Marketing Investment)/Total Investment

Where Gross Profit = Revenue – Cost of Goods Sold (COGS)

Marketing Investment = The expenses which is done specially for marketing

Some Mathematical Formulas Specially Designed for Digital Marketing:

· Cost per Mille (CPM):

Basically, it is known as cost per 1000 impression i.e. when the ad will be displayed on a SERP or on a web page 1000 times the cost is going to be charged.