Bayesian Statistics in Marketing

Abstract

Every decision in marketing, whether strategic, tactical, or operational in nature, should be based on a previously conducted analysis or research, with collected data processed using appropriate statistical methods. Accordingly, this paper presents two fundamental statistical approaches: the frequentist and the Bayesian approach. While the frequentist approach is based on the measurable frequency of events, Bayesian inference, among other features, enables the incorporation of prior information into the analysis process. Starting from the limitations of frequentist statistics, the focus of the paper is placed on Bayesian inference and its key advantages. Special attention is devoted to the analysis of the application of the Bayesian approach in marketing, through the review of selected studies in which it has been used to address various marketing-related problems.