1. METHODOLOGY FOR MODELING COMMERCIAL COMMUNICATION AS AN INFORMATION FLOW
By commercial communication we mean any form of communication developed for direct or indirect promotion (for financial purposes) of goods, services or the image of a company, organization or individual carrying out commercial or industrial activities or working in a specific professional field.
Commercial communication is seen as a means of creating a benevolent attitude towards a product offer, as well as a tool to convince a potential audience of the need to purchase a specific product, only a specific company. The analysis of existing developments showed that the problem of the effect of communication in the formulation of the problem begins with the choice of the "quality" of interaction, then an economic parameter is determined, which will be influenced by the influence of information, the type of markets is set (monopoly, duopoly, oligopoly), and as a result, a method of modeling and acceptable mathematical apparatus.
Researchers consider the problem of the effectiveness of commercial information only within the framework of generally accepted approaches and methods. The most common are: models based on expert assessments and principles of probability theory; static models based on game theory; profit optimization models for price and advertising costs; dynamic models of firms strategies based on game theory; dynamic modeling of the behavior of individuals.
It should be noted that there is a completely traditional approach in information theory, when the second law of thermodynamics is used for social systems, which describes the direction of changes in the system. As noted by A. G. Wilson*22: "There are close analogies between the concepts of physics and social physics … between value (utility) and energy". The author notes that "one of the advantages of physical analogies is that they can be useful in the analytical analysis of the system."*The Russian edition of the edition indicated in the bibliography differs from the original title of the work: "Entropy in urban and regional modeling." Wilson A.G. Pion Limited, London, 1970.
The quantity of information that can be transmitted is determined by the logarithm of the number of different write or transmit implementations. The channel through which this information is transmitted imposes certain requirements on the implementation of transmissions, so that not all implementations can be transmitted even in the absence of interference.
The parameters of the communication channel, which make it possible to single out the set of admissible implementations, are the characteristics of the information transmission channel without interference. Counting the number of admissible realizations in many cases turns out to be impossible, therefore, in practice, only a certain estimate of this value is used. Such an estimate can be considered, for example, the maximum value of the entropy calculated for all admissible distributions22.
Definition 1.1. The initial set of signs of states of the elements of the communication system will be called origin, and the final set of states as channel, intermediate states – current.
Definition 1.2. The maximum value of the entropy calculated for all admissible probability distributions is called the bandwidth of the channel without interference.
The solution to the first variational problem is to answer the question, what is the maximum amount of information that can be transmitted over the selected channel and what should be the frequency of occurrence of each symbol in the message. If the frequency of occurrence of symbols in the received message differs from the optimal distribution, then it means that when transmitting this message, not all the bandwidth of the considered communication channel has been used.
On the other hand, in the work of Chernavsky D.S.19 noted that “the value of information depends on the value of p – the probability of achieving the goal before receiving information, that is, on what preliminary (a priori) information the receptor already has. A рriori awareness is called a thesaurus. If there is none, then the a priori probability in all variants is the same and is equal to p=1/n,…“ (where n is the number of information channels). In this case, the quantity p plays the role of a normalization factor.
If at the same time, after receiving the information, the goal is achieved for sure (p=1), then the value of this information is maximum, i.e. coincides with the maximum amount of information in a given set of information delivery options. The value of information in this case is considered for the external form of information.
Chernavsky notes the specifics of working with dynamic systems that simulate the influence of information and indicates that it is necessary to talk, first of all, about "macro information". “In the case of macro information, n is the number of stable states of the system”, while “memorization is a macroscopic and dissipative process”. It is difficult to agree with these two jointly stated statements. We can either assert that stable states exist, and the process of memorization is macroscopic. Or stable states exist and are a subset of the set of all states of the system n, while the dissipativity of memorization will be a sign of the existence of unstable states of the system, which are also a subset of the set n. If signs of dissipativity appear in the characteristics of the system, it will be incorrect to talk about the stability of the system without external control. It is possible to designate such a system as closed, self-developing and self-oscillating, with the presence of an external control action.
In an application to the subject area of research, it would be appropriate to use as a guide the statement: "Valuable information is a measure of a nominal regularity"19.
Society can be considered as a process of interaction of various systems with each other and with the external environment, and all social systems (including individuals) have their own objects and attributes, and are accompanied by a random constant redistribution of resources between the elements of the system.
Socio-economic relations represent the interaction of market participants -buyers and sellers. In a competitive market, both of these groups are of the same type.
Definition 1.3. Systems that include a large number of elements of the same type, in which the transition from one state to another is carried out by the interaction of elements through certain communication channels, will be called communication systems.
Let us formulate a number of definitions that allow us to analyze the structure of relations in socio-economic systems.
Definition 1.4. The connections between the elements of the system can be divided into groups depending on their properties, direction and amount of resources used. We will call such groups of interaction of system elements communications.
The change in the state of system elements participating in communication will be determined by a sign or a number of signs of their initial and final distribution of states.
In the interaction system, the elements involved in the communication process exchange codes consisting of various symbols. Information resource – the total duration of the transmitted message.
Definition 1.5. Information is a sequence of relevant data and knowledge, regularized, by meaning, which is received, transmitted, transformed, compressed and/or registered using some signs (symbolic, figurative, gesture, sound, sensorimotor type).
An atypical consideration of the "seller-buyer" category is necessary, when both the behavior of the firm, and the information, and the behavior of consumers belong to the characteristics of intra-firm planning, and not to the market system in general. One of the possible solutions to this formulation can be the creation of a chain of models that consider the problem of assessing the effect of commercial communication using the system connections of mathematical tools and methods of modeling commercial communications. To study the effect of communication, a systematic approach is important, including the formulation of a complex problem with step-by-step modeling. This will take into account all possible aspects of the impact of commercial communication on consumption.
Building a communication management system begins with identifying the main factors that determine the consumer behavior of potential buyers.
As a result of the analysis of existing approaches and methods, the price of goods and information impact, adjusted for the cost of information, are taken as the main most accessible factors affecting the final demand. The price of a product is the main factor in determining the targeting consumer segment in the market, based on social characteristics and price elasticity of demand for a product, which allows taking into account the character of market relations in situations: "monopoly" or "competition".
Fig. 1.– The system connections of mathematical tools and methods of modeling commercial communications.
As an initial premise, the methodology of analysis of management systems is used, based on a gradual transition from the macro level to the microeconomic level, that is, to the level of internal planning of the firm and decision-making in demand management (Fig.1).
The global formulation of the problem based on the price and informational prerequisites of consumer demand leads to the determination of the components of the commercial communications system in a competitive commodity market, which makes it possible to develop a schematic solution of the communication system in the commodity market. The analysis of the obtained circuit solution authorizes the possibility of identifying the typical information behavior of each of the competitors and localizing the problem setting by the criteria of in-house planning.
After developing a schematic solution for the trivial case of a commercial communication management system, in the case of considering one information channel, a conditional transition is either to the typology of the system and its schematic solutions, and then to model formalization, or directly to model formalization.
For a quantitative analysis of the behavior of the system as a whole, the behavior of each of the elements of the system is described by identifying microeconomic patterns, as well as by adapting the least squares method to identify microeconomic patterns, as well as numerically assessing the parameters of the functions of microeconomic development.
On the basis of the obtained microeconomic functions, a dynamic modeling of the "supply – demand for goods" commercial communication system and the information incentives management system is carried out, where the parameters that determine the behavior of the system reflect changes in the structure of connections between elements. The functions describing the dynamics of the system determine the change in the behavior of the system in time, and the vector of independent coefficients takes into account the influence of the external environment on the behavior of the elements.
The analysis of demand values, total costs and optimal prices and costs presupposes a conditional transition to the adjustment of input parameters and a new estimate of the change in demand over time. If the obtained values of the indicated quantities are accepted as satisfactory, then we can talk about the implementation in practice of the decision-making on demand management.
Based on the communication stages of the consumer's reaction to the advertising message, the targets of specific advertising events are formed, during which indicators of the change in demand for each brand product are recorded.
Positive effects at all intermediate stages of informing, up to the achievement of the target, are into tight functional tasks of communication. A prerequisite is the control at the early communication stages of the consumer's reaction to advertising, for example, in the form of recording the number of contacts and minimizing the cost of this contact. Without them, the chain of stages is broken, and the strategic target cannot be achieved (Fig. 2).
The main decision-making tools in the described conditions are: the criteria and objectives of the enterprise regulating the use of the resource (advertising costs); properties of the object to which the influence of the spent resource of the advertiser is directed; structural and economic principles of the relationship between the enterprise and the contractor; parameters of analytical tools for assessing the economic efficiency of a solution.
Strategic thinking requires restructuring the whole management system, increasing the efficiency of all departments and, ultimately, subordinating all elements of the product life cycle to the interests of the market. The main characteristics of decision-making are: clear consistency with the general target of the enterprise; informational authenticity; hierarchy of importance and advisability; economic profitability.
Fig. 2 – Model of management and control of communications.
At the level of the targets hierarchy, in the presence of the necessary achievement factors, the following increases: the effectiveness of communication as a contribution to commercial targets, sustainability and building a brand and business as a whole; science intensity, labor intensity, terms and cost of preparation and implementation of an advertising campaign; the degree of strategic partnership and trust in the work between the advertiser on the one hand and the advertiser on the other.
An enterprise, to successfully be in competition modern conditions, needs to fully use its communication potential.
There are two main approaches to evaluation the effectiveness of commercial communication using these assessment tools: economic and communication (informational or psychological interpretation of communicative relations).
At the same time, communication can be interpreted in a broad sense, as an interaction between all elements of the socio-economic system, as well as in the contexts of the way information is delivered to the recipient and options for its interpretation as a communicative act.
The possibility of building relationships with clients, creating a unified field of market interests in the future allows achieving a synergistic effect not due to material investments in business, but due to the intangible component of business interaction.
The competencies of employees, realized in the form of communication interaction with the client, can be presented as an additional attribute of the subject of the transaction. As noted by K.L.Keller, working in the field of creating and maintaining customer loyalty, it is necessary to create a "point of difference" in the minds of people1.
Sales strategies used by sellers of industrial consumer goods in B2B relations must be supported by a clear understanding of the information processing process, which occurs not in some abstract continuum by abstract actors, but by people making decisions in the space of "useful knowledge"2.
Those who purchase services can make their decisions not only in terms of corporate good, but also “influenced by emotional factors such as trust, safety and peace of mind”3. Strengthening relationships with consumers of the offered goods provides the basis for economic ties between contractors at the expense of the intangible assets of the parties to the relationship. The growth of the consumer value of the transaction is the main condition for the implementation of the customer loyalty program. Goodwill as a marketable asset is important because of its uniqueness, since by its nature it is an integral part of the company.
The purpose of the study is to study the influence of business reputation and its components on the process of concluding a deal as a result of communication between counterparties. Hypotheses: 1. Individual and professional competencies of employees, being complementary components of the good "business reputation of the organization", along with the brand and its recognition, influence a positive outcome when concluding a contract. 2. The content of the communication process between counterparties forms the consumer expectations of the participants.
The research methodology is based on an interdisciplinary approach, which includes: elements of cognitive analysis, systems theory and systems analysis, elements of contract theory, public relations management theory, information economics theory, behavioral economics, sociology.
Let us dwell in more detail on the conceptual prerequisites of competence, referring to the work of Lingham4, in which he identified areas of competence that are manifested at three levels: organizational, process and individual.
The problem under consideration, due to the specifics of communicative interaction, reflects the change in the state of the participants in communication over time. Thus, the communication interaction of employees-representatives of counterparties is an iterative process in which organizational, professional and individual competencies are involved.
To describe the model of communication interaction between counterparties, a linked type of information interaction between the seller and the consumer of the goods is determined. A linked type of interaction is an interaction in which free interaction leads to feedback. Such a scheme of interaction in the process of communication between contractors allows us to talk about the emergence of an open system of communicative relations. The stronger the interaction between participants, the higher the likelihood of feedback loops.
The parameters of the communication channel, which make it possible to ensure the availability of feedback, are the characteristics of the information transmission channel without interference, and the transfer of the counterparty to the “Customer” category, that is, the repeated purchase of goods, will be a characteristic of the self-organization of communication interactions. Communication costs are actually investments in the long-term capital of consumer preferences. The investment in customer loyalty pays off over a long period of time, and customer goodwill slowly devalues as it slowly gains in the market.
Making a consumer choice, the client motivates his actions by the desire to achieve the marginal utility through the purchase of goods, that is, he implements rational behavior. Consumer preferences in this case can be described by a utility function defined on the set of transaction attributes that have developed in the mind of the employee representing the client.
Fig. 2 – Communication interaction of counterparty.
The consumer's choice is obviously determined by his desire to maximize utility, so he searches not for a product, but for solutions to the problems that a contract can provide.
If there is an equilibrium contract price (a price that satisfies both parties), due to the absence of price influence, it is permissible to use a linear exchange model using the linear programming method similar to that presented in5.
I will dwell on the emerging interactions in more detail (Fig. 2). Interactions of the “Company” side: awareness of the seller's representatives about the subject of the transaction expressed in the form of professional competence (higher than that of the buyer); individual competencies of employees, coinciding with the social dominants supported by representatives of the "Customer".
The “Company” has the advantage of presenting the individual competencies of its employees, fulfilling the expectations of the counterparty at the interpersonal level. Interactions of the “Customer” side: awareness of the subject of the transaction, brand and business reputation of the counterparty (within the limits of professional competence); social awareness of the brand and business reputation (within the framework of individual competence). Representatives of the "Customer", along with business interests, are carriers of public opinion. Schematic solution of the communication interaction of contractors, presented in Fig.2 reflects the influence of professional and personal competences on the decision-making process in favor of concluding a contract when the organizational competence of the seller is satisfactory from the buyer's point of view.
Relationships in the communication process reflect supply and demand: R1, R2 – the impact of the organization's objective on the behavior of employees (organizational competencies); r1 – product price offer and business reputation offer; r2 – is the price demand for the product and the demand for a positive business reputation; r3 – offering the individual and professional competencies of the Company's employees; r4 – offering individual and professional competencies of the "Customer"; r5 – demand for individual and professional competencies of the Company's employees and business reputation. The presence of the r5 connection is a special case of the manifestation of the effect of asymmetric information, and two-fold, and the system under study can be classified as open, with the property of self-organization. The characteristics of the environment are formed by the market awareness of counterparties through various media (branding and other components of marketing communications).
Studying the nature of consumer expectations in the process of concluding a contract, one should pay attention to two main characteristics of the "Customer" that form mutually intersecting sets of consumer expectations. Let's call these sets "individuals" and "corporations", indicating the boundaries of their interaction6.
"Individuals" implement the behavior of an individual consumer seeking to satisfy personal needs. They are guided by such motivational factors that are focused on their own reference group, trying to somehow justify its role expectations, to meet certain social standards. This focus on mass character is realized not only at the conscious level, but also manifests itself on the unconscious, which is monitored by the example of imitative behavior.
This type of behavior is formed through mass communications, while the informational impact is interpreted as a process of intangible production of the value of the goods. In this situation, the “private person” assesses the social component of the brand and business reputation of the partner through interaction at the level of individual and professional competence of employees. Consumer choice in favor of a particular counterparty by a “private person” can be divided into two phases: an effective choice, carried out in the same way by all consumers, and a personal choice of each consumer. In other words, consumer choice is a kind of social need that consists of a set of specific requirements determined by the individual's motivation. When the representatives of the "Customer" implement the model of the individual consumer, the behavioral characteristics fit into the pattern of relationships in the B2C (Business-to-Customers) market.
As David Myers notes, from the perspective of social psychology, all participants in social interaction are subject to prejudice, negative stereotypes and conformism. At the same time, certain behavioral models (“frustration and aggression, the need for status, distinctive features”6) that produce competition ultimately give rise to prejudices. The behavioral model of “attribution error”6 is also interesting, when in the process of interaction, individuals project onto the situation the characteristics of the personality and its status. In fact, objective procedural components are being replaced by personal socio-psychological preferences.
Thus, the "Individual" takes an active part in the search for satisfaction, that is, consumer utility is a finite set. Let's call it "private satisfaction", consisting of several levels of consumer satisfaction.
This is consistent with the conclusions of A.N.Leontyev that any activity based on the initial afferentation excites effector processes that implement contacts with the object environment, and then the image of the object is corrected and enriched with the help of feedbacks of the original afferenting image.
In neurobiology, the concept of reverse afferentation proposed by P.K.Anokhin, is used in the framework of the theory of functional systems.
Reverse afferentation can be divided into three types: 1) from the receptors that register the final result; 2) from the receptors of the executive organs; 3) based on the results of behavioral activity9.
The consumer expectations of a "corporation" are based primarily on the rational (professional) side of consumer choice. By "rational satisfaction" we mean the needs and requirements formed by the specifics of the industry market and the resources of the organization. Moving on to the resource approach, we note that each organization has certain sets of resources that form the results of their activities6. The "Company", acting as a seller of services, determines those levels of the "Customer" needs that he can satisfy. In this context, levels of "rational satisfaction" are also a criterion for selecting counterparties based on financial characteristics.
Considering “rational satisfaction”, it is interesting to refer to the work of Habermas J. Moral consciousness and communicative action, and in its context, the analysis of communication in the process of a transaction, as a discourse of economic agents, highlighting the following components: egocentric benefits, consent, mutual understanding, the desire of actors in mutual understanding10. These components of the discourse are associated with the traditions supported by the participants in communication, the degree of objectivity within the existing society. At the same time, communication takes place within the framework of social and economic institutions that have developed in society, which rely on existing norms (truth, correctness and truthfulness) and institutional mechanisms that bring norms into action (objectivism, norm formation and expressiveness).
Thus, the “rational satisfaction” of the communication participants is directly related to the moral consciousness of the community, in this case, the “Corporation”, or corporate culture. The degree of predisposition of the corporation's employees to distorting publicly presented commercial information (information asymmetry) and the level of market confidence in the “Corporation” (reputation).
In conclusion, I note that the consumer choice of a buyer in favor of a certain seller implements three phases: an effective choice made in the same way by all consumers, a personal choice of a decision-maker, and a rational choice determined by the organization's resources.
Competitive advantage today depends on the ability to satisfy not only the functional requirements of customers, but also their intangible needs in the form of prestige, convenience and reliability. This statement reflects the need for an interdisciplinary study of factors influencing consumer behavior, and the applied implementation of research results in the context of modern realities.
Effective approaches to advertising organization result in significant competitive advantage. Let's analyze the main directions of research in the field of assessing the effect of advertising. For a quantitative assessment of the phenomena under study, it is necessary to study the functional connections that arise in socio-economic systems, and to determine convenient ways of setting tasks. The study of generally accepted instrumental methods identified the following approaches to targets setting in the study of commercial communication: axiomatic approach; setting targets, optimization tasks; study of localized events not counting the influence of time; studies of the nature of the change in the phenomenon over time.
Such a grouping is conditional, since the indicated methods of analysis, to one degree or another, involved in the study of such a complex phenomenon as commercial communications are very diverse. The process of society's consumption of commercial information is associated with high entropy.
Therefore, the setting of tasks for assessing the impact of advertising, as a rule, is takes out on a localized subject and time scale. Localization is achieved by defining mainly qualitative, verbal search criteria, less often the designated criteria are formalized in the language of mathematics. For a clearer understanding of the problem, we will consider the basic concepts that allow us to study the influence of information on the behavior of individuals and communities united in groups based on various principles of a socio-economic nature.
The practical assessment of the advertising effect is based on popularized media planning technologies.
When making a purchase, the consumer motivates his aspirations by the desire to achieve the greatest satisfy (marginal utility) through the purchase of a product. Consumer preferences are usually described by the utility function U(x) defined on the set of sets of goods to achieve maximum satisfy (marginal utility). The consumer's choice is obviously determined by his desire to maximize the utility function.
The buyer is not searching for a product, but a solution to the problem that the product can provide. Different products can satisfy the same need. The individual consumer seeks to satisfy the need, guided by the main motivational factors and takes an active part in the search for compensation, that is, consumer utility is a function depending on the set of levels of consumer satisfaction U = [U1, U2, .. Un] where Ui – are the levels of consumer satisfaction. The behavior of the buyer as an economic agent that independently creates final satisfaction when combining time and goods was considered in the theories of Becker2 and Lancaster. Satisfaction levels are formed under the influence of many factors that can be described by a tuple (final sequence) Ui =
With a conditionally fixed price for a product, there is a possibility of considering consumer behavior with a constant income, as well as with a change in income for the analyzed period. The social system of preferences is constantly changing over time under the influence of various informational stimuli – marketing, politics, etc.
Consumer behavior includes all types of human mental activity that precede, accompany and follow the decision to purchase. Customer behavior can be viewed as a decision-making process that can be divided into several stages, characterized equally by both the neurological reactions of a person and the psychological characteristics of human thinking. Let's designate the generalized stages of decision making by the buyer: awareness of the problem; assessment of alternatives; buying decision.
Possible economic situations in which an individual (potential buyer) may be, we denote as a finite set E={E1, E2 …, En}, where Ei – is a subset consisting of sets of two elements Ei={P, I}, including a set of prices (P) and disposable income (I), while all possible options for consumer purchases can be described by the “budget restriction” condition.
The buyer's preferences at the time of selection are based on the level of perceived satisfaction from using the product. The general level of utility of the product to the customer depends on this satisfaction.
Let us define the market as a sphere of commodity-money relations, with an indirect relationship in the form of the sale and purchase of benefits, between producers and consumers of products, which combines means, methods, tools, organizational and legal norms. The structure of connections in the market in the market ensures the successful functioning of such relations.
The simplest example of modeling a market, dynamic equilibrium of price demand and price supply is the linear Evans model27. The main assumption of the model is based on the fact that price changes proportionally effect of changes in supply and demand growth. The functional relationship between supply and demand is modeled using paired linear regression. Regression coefficients are calculated during simulation, based on statistical data. The utility of commodity consumption is defined as the equality of supply and demand25, provided that the found optimal price P* is the root of the equation D(P)=S(P), where D(P) is the demand or solvent need of an individual, S(P) is the commodity supply. The quantity (volume) of demand is the quantity of goods or services that consumers want and can buy at every possible price for a certain time under given conditions25.
The solution to this simple equation can be found by the iterative method, by successive approximations P0, P1, …, Pk-1, Pk, .... It should be noted that the product supply lags one iteration behind the demand for the product, which can be written as D(Pk)=S(Pk-1). This is an important factor very often determining the result of the influence of commercial information.
The graphical representation of the iterative process can be associated with the appearance of the web, which is formed around the point of intersection on the graph of the curves of price demand and supply, and is called the "Cobweb model".
As a lyrical remark reflecting the vital necessity of interdisciplinarity, I will point out a small observation related to economics as a science in Russia and linguistics, which have completely lost all relation to science as such, especially economic.
Hopefully most economists are well-known with the world best seller “Economics”, translated into Russian. I am perplexed because of the illustrations of the market laws of economics in the famous translation of the book "Economics" depicted in an atypical mathematical representation.
The axes of the values of functions and arguments are inverted, and the graphs themselves may be misunderstood by a poorly mathematically trained reader.
Bad mathematical preparation in this case can affect the perception of the text so that the reader perceives the price of the product as a function, and supply and demand are mathematical arguments. I see this in two ways.
First, such an interpretation of supply and demand models is associated with the structure of the English language and the semantics of the concepts of "demand" and "supply".
I kept the translation “the curves of price demand and supply” not trying to get mathematical accuracy in the translation. Because, in fact, this is a correct verbal interpretation of a socio-economic phenomenon.
Secondly, practice shows that as demand for a product grows or in the absence of a decrease, the seller sets a higher price than the original price in an effort to increase profits.
So the limitations of mathematical models give way to socio-economic phenomena, and language, being actually a social phenomenon, helps the researcher to understand the essence of the approach that he studies.