Using games as a marketing tool, a process also known as gamification, is a popular trend that guarantees higher conversion and better brand engagement. You can find loads of information about it on the web, but we want to focus on one of the most complicated applications of a game aspect in marketing — Game Theory.

According to game theory, "a game is any interaction between multiple people in which each person’s payoff is affected by the decisions made by others." Sounds like marketing, doesn’t it? Now we will try to understand how to gain from it.
Game theory is a mathematical model for studying and using optimal strategies in games. A game is a process of interaction between two or more parties competing for getting a reward. Each party has its own goal and uses its strategy that can make it either a winner or a loser, depending on how other parties act. Game theory helps a player choose the best strategy, taking into account the analysis of the behaviour of other players, their resources and their possible moves.

Game theory is mainly used in foreign affairs and economics; more rarely in sociology, political study, psychology, ethics, law. This digest shows how game theory can be applied to marketing.
Citius, altius, fortius!
Faster, Higher, Stronger!
“The Chess Players” (Dutch: De schaakspelers), created by Lucas van Leyden (1494—1533), is one of the first Dutch genre scene paintings. The painting shows a courier chess position, the only known scene of this kind in the history of art.
The cover story contains information on how to apply game theory, quite a complicated and, in fact, a non-traditional tool in marketing, to your communication and lead generation strategies. In practice, this tool can help you nurture your lead during the customer journey and convert your lead into a customer at low cost and at the right moment. Game theory can also become a helping hand in market segmentation and targeting.
To marketing specialists who want to boost conversion through communications
The main issue is that game theory as a marketing tool can analyze every decision the lead makes and use this analysis to offer the next rational moves you can control.
Here is an example of how to create the right customer journey with the use of content. Imagine that you are selling sports equipment. You send the first e-mail containing three pieces of content: for golfers, footballers and tennis players. For example, a lead follows the link for golfers. Then, with your second message, you send this lead exclusively golf content. You can further segment golfers by skill: starters, hobbyists, pros; then by welfare; and so on. The main point is to offer your lead a choice and the desired action each time. If you wisely use segmentation, your customer gets the right message at the right time, which improves conversion.
Game theory offers, first of all, a scientific approach to how you behave in the game where you have competitors and allies. To apply it in the most efficient way you need to do some homework. Instead of reading massive reports about game theory, we recommend a short but detailed video by SciShow.
This is not always a cooperative game. There is a standard example in the competitive game theory, called the prisoner’s dilemma, according to which rational players might not cooperate, even if cooperation appears to be in their best interests. According to this experiment, betrayal is the dominant strategy, so to achieve the best outcome both members should choose not to cooperate. It means that you need to betray to be better off no matter what your opponent decides to do. As betraying partners offers a greater reward than cooperating with them in all circumstances, all rational players will betray the others.
To all, not just marketers. To know game theory principles is to know the rules of many types of social interaction
To marketers, CRM specialists, sales managers
We addressed the customer segmentation process in our first story. If you are not good at it, the link below contains very useful information about segmentation.

The contributor recommends that an online marketer should synchronize segmentation with activation and reporting to better understand the target market, increase sales and reduce costs.
Why is segmentation important?
Follow the link to play a game about trust. Surveys show that over the last forty years fewer and fewer people say they trust each other. Game theory can explain this broad trend of mistrust and find a way to make things right.

You should try to play this brainteaser game and apply game theory to real life.
Playing game theory
Read a great study, showing how to apply game theory to marketing decisions and benefit from it. This impressive work, based on a great number of literature sources, provides insight into the use of game theory to enhance the 4 Ps of marketing: product, price, place and promotion. It contains a detailed review of the main decision-making techniques — prisoner’s dilemma, Cournot model, Bertrand model, quasi-game model, Stackelberg model.
Impressive research on game theory from Nigeria
You will hardly make use of the idea, but it’s good for general knowledge and a better understanding of the prisoner’s dilemma
In the 70s, the US government banned the tobacco industry companies from advertising their products on TV. One would think it would hurt their business as less people would see their brands and, consequently, would go to competitors. But the devil is in the details — competitors could not advertise either! And this is another pair of shoes, for people would not stop smoking only because the ads are banned, would they?

The video shows how players are better off is they use common terms and rules (inability to advertise here).
To sum up
This digest provides a multipoint review of game theory as a marketing tool. In fact, this is another way of optimizing your strategy and improving interaction with leads and customers; and of earning more, of course, thanks to improved segmentation and targeting process.

Not all of you will dash to put this tool into practice right away, but some aspects surely deserve your attention. For example, the use of game theory as an attribution model will help you accurately estimate the impact of each touchpoint in the conversion path.

Thank you for your attention and see you next time!