6. Structural Models in Marketing: Consumer Demand and Search

As marketers move away from being focused only on “local” effects of marketing activities, e.g., what happens when I change price by 1%, in order to better understand the consequences of broader shifts in policy, the need for structural models has also grown. In this chapter, I will focus on a small subset of such “structural models” and provide brief discussions of what we mean by structural models, why we need them, the typical classes of structural models that we see being used by marketers these days, along with some examples of these models. My objective is not to provide a comprehensive review. Such an endeavor is far beyond my current purview. Rather, I would like to provide a basic discussion of structural models in the context of the marketing literature. In particular, to keep the discussion focused, I will limit myself largely to models of demand rather than models of firm behavior.