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Marketing Engineering: Revised 2nd Ed.

We do not recommend this book be used in class as many of the computer models integrated into the text are no longer available in our software. For advanced students, our current recommendation is a combination of Principles of Marketing Engineering and Analytics and Technical Notes. The Principles book gives the general overview of the models while the Technical Notes describes the analytics behind the models.

mebookcover_newTitle: Marketing Engineering: Computer Assisted Marketing Analysis and Planning, Revised 2nd Edition
 Gary L. Lilien and Arvind Rangaswamy
Publisher: Trafford Publishing
Copyright: 2004
ISBN-10: 1412022525
ISBN-13: 9781412022521
Format: Softcover
Pages: 538
Intended Audience: Graduate-level business school students with technical background or training.
Suggest Retail Price: $70.00 (softcover)

Book Description

We have designed this book primarily for the graduate business school student, who, with strong technical background or training, must understand the analytics behind the models associated with Marketing Engineering.

Our Marketing Engineering Revised 2nd Edition text provides a complete treatment of both the concepts and the models involved in marketing engineering. Package includes text,  software (please note that software is no longer included with this text), and cases, and is designed for the more analytical students and for dedicated courses. This book can be used with our new software (Marketing Engineering for Excel), with some adjustments. Please view our transition guide for more details.

A Note from the Author:

Dear Marketing Engineering Revised 2nd Edition User:

The several editions of Marketing Engineering that we have published since 1998 have been aimed at a fairly narrow, somewhat technical audience interested in bringing more scientific rigor to the marketing discipline. Versions of that book were adopted by more than 150 business schools on five continents. In 2007 we published Principles of Marketing Engineering to reach a broader, less technical audience. A key complement of that book, in response to user feedback, was Marketing Engineering for Excel (ME>XL), i.e., our Marketing Engineering software as an Excel Add-in. The response to that effort has been extremely positive and we have abandoned the original Marketing Engineering software platform, the one that produced the software complement to previous editions of this book.

Hence, as the note on the cover indicates, software is not included with the book. More importantly, when we reference software in the book, those references refer to a version of the software that is no longer available.

Gary Lilien

Subject Areas

The Marketing Engineering Revised 2nd Edition book includes the following topics: 

  • Market Response Models
  • Segmentation and Targeting
  • Positioning Analysis
  • Strategic Market Analysis
    • Market Demand and Trend Analysis
    • Product Life Cycle
  • Strategic Marketing Decision Making
    • Shared Experience Models: The PIMS Approach
    • Product Portfolio Models: The GE/McKinsey Approach
  • New Product Decisions
    • Conjoint Analysis for Product Design
    • Forecasting Sales using the Bass Model
    • Pretest Market Forecasting with the Assessor Model
  • Advertising and Communication Decisions
  • Salesforce and Channel Decisions
    • Reallocator Model
    • CALLPLAN Model
  • Price and Sales Promotion Decisions

Table of Contents

PART I The Basics

Chapter 1 Introduction

Marketing Engineering: From Mental Models to Decision Models.
Marketing and marketing management
Marketing engineering
Why marketing engineering

Marketing Decision Models
Characteristics of decision models
Verbal, graphical, and mathematical models
Descriptive and normative decision models 

Benefits of Using Decision Models

Philosophy and Structure of the Book
Objectives and structure of the book
Design criteria for the software 

Overview of the Software
Software access options
Running marketing engineering 


How Many Draft Commercial Exercise

Chapter 2 Tools for Marketing Engineering: Market Response Models

Why Response Models?

Types of Response Models

Some Simple Market Response Models



Multiple Marketing-Mix Elements: Interactions

Dynamic Effects

Market-Share Models and Competitive Effects

Response at the Individual Customer Level

Shared Experience and Qualitative Models

Choosing, Evaluating and Benefiting From a Marketing Response Model


Appendix: About Excel's Solver

How Solver Works

Conglomerate, Inc. Promotional Analysis

Conglomerate, Inc. Response Model Exercise

PART II Developing Market Strategies

Chapter 3 Segmentation and Targeting

The Segmentation Process
Defining segmentation
Segmentation theory and practice
The STP approach
Segmenting markets (Phase 1)
Describing market segments (Phase 2)
Evaluating segment attractiveness (Phase 3)
Selecting target segments and allocating resources to segments (Phase 4) 
Finding targeted customers (Phase 5)

Defining a Market

Segmentation Research: Designing and Collecting Data
Developing the measurement instrument
Selecting the sample
Selecting and aggregating respondents

Segmentation Methods
Using factor analysis to reduce the data
Forming segments by cluster analysis: Measures of association
Clustering methods
Interpreting segmentation study results

Behavior-Based Segmentation: Cross-Classification, Regression and Choice Models
Cross-classification analysis
Regression analysis
Choice-based segmentation

Customer Heterogeneity in Choice Models

Implementing the STP Process


Conglomerates Inc.'s New PDA (2001)

Introducing the Connector

The History of the PDA

PDA Types

The PDA Customer

PDA Features

Facts about the PDA Market

The HCV Survey

The Questionnaire
Questions for determining segmentation-basis or needs variables
Questions for determining variables for discriminate analysis

Appendix: PDA Features Guide
Operating system
Modem & online services
E-mail, etc.
Handwriting recognition
Other software

ABB Electric Segmentation Case


Situation in 1974

New strategy at ABB Electric

Establish the MKIS Program

Choice Modeling

Postscript: situation in 1988

Chapter 4 Positioning

Differentiation and Positioning
Positioning Strategy

Positioning Using Perceptual Maps

Applications of Perceptual Maps

Perceptual Mapping Techniques
Attribute-based methods
Similarity-based methods for perceptual mapping

Joint-Space Maps
Simple joint-space maps
External analysis using PREFMAP3

Incorporation Price in Perceptual Maps


Appendix: Factor Analysis for Preprocessing Segmentation Data

Positioning the Infinity G20 Case

Introducing the G20


Research Data

Chapter 5 Strategic Market analysis: Conceptual Framework and tools

Strategic Marketing Decision Making

Market Demand and Trend Analysis
Judgmental methods
Market and product analysis
Time-series methods
Causal methods
What method to choose

The Product Life Cycle

Cost Dynamics: Scale and Experience Effects


Bookbinders Book Club Case

The Bookbinders Book Club

Chapter 6 Modems for Strategic Marketing Decision Making 

Market Entry and Exit Decisions

Shared Experience Models: The PIMS Approach

Product Portfolio Models
The Boston Consulting Group (BCG) approach
The GE/McKinsey approach
Financial models
Analytical Hierarchy Process



ICI Americas R&D Project Selection Case

Product Planning Using the GE/McKinsey Approach at Addison Wesley Longman Case

The new marketing texts
The new marketing book promotional challenge
Applying the GE approach

Appendix: Details of the Three Books from AWL Promotional material

Portfolio Analysis Exercise

Jenny's Gelato Case

ACME Liquid Cleanser Exercise


The Compete Model

Part III Developing Marketing Programs

Chapter 7 New Product Decisions


New Product decision Models
Models for identifying opportunities
Models for product design
Models for new product forecasting and testing

Conjoint Analysis for Product Design
Conjoint analysis procedure
Other enhancements to the basic conjoint model
Contexts best suited for conjoint analysis

Forecasting the sales of New Products
Overview of the Bass model
Technical description of the Bass model
Extensions of the basic Bass model 

Pretest Market Forecasting
Overview of the ASSESSOR model
The preference model
Trial-repeat model
The validity and value of the ASSESSOR model

SummaryForte Hotel Design Exercise

Forte Executives Inns

Company Background

Preliminary Evaluation

Conjoint Analysis (Matching hotel attributes to customer preferences)

Zenith High Definition Television (HDTV) Case

HDTV Background

Zenith HDTV Efforts to Date

The TV Market

Forecasts of HDTV Sales

Johnson Wax: Enhance Case(A)

Instant Hair Conditioner

S.C. Johnson & Company

New-Product Development at Johnson Wax

The Hair Conditioning Market


Enhance Product Development

The ASSESSOR Pretest Market

Trial and repeat model
Preference model estimates of share


Chapter 8 Advertising and Communication Decisions

The Bewildering Nature of Advertising

Advertising Effects: Response, Media and Copy
Advertising response phenomena
Frequency phenomena
Copy effects

Advertising Budget Decisions

Media Decisions

Advertising Copy Development and decisions
Copy effectiveness
Estimating the creative quality of ads
Advertising design 


Blue Mountain Coffee Company Case

Blue Mountain's Market Position

Operation Breakout

Planning for Fiscal Year 1995
The market planning model
Recent developments:The U.S. coffee market in transition

Convection Corporation Case
Using a Communication Planning Model to Aid Industrial Marketing Budget Decisions
Flowclean Sootblowers
Corlin Valve

ADVISOR: An Approach to Marketing Budget Planning

Budget task force meeting

Johnson Wax Ad Copy Design Exercise

Chapter 9 Salesforce and Channel decision

Introduction to Salesforce Models
Sales-response models for representing effects of sales activities
Salesforce management decisions 

Salesforce Sizing and Allocation
Intuitive methods
Market-response methods (the Syntex model) 

Extending the Syntex Model: Reallocator
Sales Territory Design
The GEOLINE model for territory design

Salesforce Compensation
Using conjoint analysis to design a bonus plan (the MSZ) model

Improving the Efficiency and Effectiveness of Sales Calls
The CALLPLAN model

Marketing Channel Decisions
The gravity model


Syntex Laboratories (A) Case

Company Background

Syntex Laboratories

Syntex Labs' Product Line
Topical Steroids

The Sales Representative

Sales Management at Syntex Labs
Sales Force Size
Call Frequency
Allocation of Sales Efforts Across Products and Physicians Specialties
Geographic Allocation of Sales Force

Sales Force Strategy Model
Model Development Process
Defining the model inputs 
Model Structure
Results of the SSM Analysis
Management implications 

The John French Exercise: Sales Call Planning for UBC (CALLPLAN)
J&J Family Video Case

Chapter 10 Price and Sales Promotion Decisions
Pricing Decisions: The Classical Economics Approach

Pricing in Practice: Orientation to Cost, Demand, or competition
Cost-oriented pricing
Demand-oriented pricing
Competition oriented pricing 

Interactive Pricing: Reference Price and Price Negotiations
Price Discrimination
Understanding price discrimination
Geographic price discrimination
Temporal price discrimination
Nonlinear pricing or quantity discounts
Other forms of price discrimination 

Pricing Product Lines

Sales Promotions: Types and Effects
Objectives of promotions
Characteristics of promotions 

Aggregate Models to Analyze Promotional Effects

Analyzing Individuals' Responses to Promotions


Account Pricing for the ABCOR2000 Exercise


The value spreadsheet

Price Planning for the ABCOR2000 Exercise

The Problem

Paving I-99 Exercise
Part 1: Training Exercise
Part 2: The bid-competition simulation

Forte Hotel Revenue Management Exercise

How the Generalized Revenue Model works

Massmart Inc. Case


Scanner-Panel Date

The Promotion Model

PART IV Conclusions

Chapter 11 Marketing Engineering: A Look Back and a Look Ahead

Marketing engineering: A Look Back

Using Marketing Engineering Within firms

Marketing Engineering: A Look Ahead


Student Copies

In most situations, we do not recommend that this book be used in the classroom as we no longer have software models that correspond to many of the models in the textbook. Our current recommendation is using a combination of the Principles of Marketing Engineering with the supplementary Technical Notes which provide the analytics that were originally incorporated directly into the Marketing Engineering Revised 2nd Ed. text.

If you would like to use Marketing Engineering Revised 2nd Edition in your classroom, there are several ways your student may access the text in either printed or ebook format.


University Bookstore (or Instructor) Purchase: University bookstores (or instructors) may purchase texts directly from our publisher, Trafford (

Student Purchase: Students may purchase printed copies of the text from online channels such as Amazon.


Student Purchase: Students may purchase an ebook version of the text via the Google Play Store (not available in all countries). 

Instructor Evaluation Copy

Confirmed instructors on our website may request a digital review copy of Marketing Engineering Revised 2nd Edition by contacting us through the Support Center.