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Marketing Mix Models
Isolates impacts of all marketing elements. Finds sources of volume growth or decline. Measures ROMIs for each activity. Provides with recommendations on how to maximize volume and profit through effectiveness and ROI optimization
What is marketing mix modeling?
Marketing mix modeling is an analytical approach which identifies and quantifies the marketing elements which impact consumer behavior in the short-term. Marketing factors in the model includes:
  • Seasonality of the business
  • Population and population segments changes (gender, ethnic, and age groups)
  • Socio-economic changes (inflation, unemployment, etc.)
  • Weather
  • Holidays and other major calendar occasions (Halloween, Super bowl, etc.)
  • Trade Promotion activities for all products analyzed including competitors (Features, Displays, Temporary Price Reductions)
  • All consumer promotion activities for all products including competitors (FSIs, In-pack, On-Pack coupons, Direct mail, Sampling, Internet requested promotiions)
  • All advertising activities for all products including competition (TV, Print, Radio, Outdoors, Internet)
  • Distribution changes for all products including competition (%ACV and Items per Store)
  • New product introductions
  • Price changes for all products including competitors
  • All marketing factors are tested for non-linear relationship with volume (diminishing returns, and saturation levels)
  • Advertising, Trade, and Consumer Promotion factors are transformed to take into account their impact on following weeks
  • Incorporated into the model at the most disaggregated level possible (size, flavor, fragrance) to provide high level of output detail

POINT OF DIFFERENCE: PM Group has extensive experience in developing models that include demographic, economic, and environmental factors

How do we model?
Models are typically built using multiple regression analysis, a statistical procedure that relates changes in marketing mix elements to weekly changes in product sales
  • Models can be linear, log-linear, log-log, and other forms to fit the specific characteristics of the problem to be solved
  • Models can be built one at a time (i.e., one brand, one portfolio) or through simultaneous equations (category and all composing brands)
  • Models can be built with store-level, account-level, or market-level data (pooling geographies increases the depth of the analysis)
  • Models can be constructed to isolate impact of all factors on Category, Portfolio, Brands, and Product aggregations (size, flavor, etc.)

POINT OF DIFFERENCE: PM Group carefully chooses the best method / model for each marketing problem. We are not a one-size-fits-all company (linear volume models for every client and project). PM Group has seventeen years of experience in more than 85 categories.

Marketing mix modeling answers the following important questions:
MARKETING MIX
  • What is the incremental volume of each marketing element in total and by tactic?
  • How much incremental dollar sales is generated for a million dollar invested in each marketing element, and in each specific tactic?
  • What marketing tool is the most cost-efficient? Are My Marketing Efforts Profitable?
  • What is driving your brand volume changes year to year?
  • How much volume is generated by marketing activities? What part of consumer-promotion generated volume and trade-promotion generated volume is actually incremental? What part of those volumes is subsidized?
  • How Does My Marketing Effectiveness Compare to My Competitors?
  • What would happen next fiscal year if I change marketing spending allocations
ADVERTISING
  • How much incremental dollar sales is generated for a million dollar invested in each Advertising campaign? Which are the most cost efficient campaigns? What are the most cost efficient media vehicles (Radio, Print, or TV)?
  • Is My TV Advertising Working?
  • Which are my most effective commercials? Which day-part delivery is more effective and cost efficient? How does TV advertising response vary by commercial length (e.g., :15’s versus :30’s)?
  • Is there any advertising “halo” effect (e.g., Brand A commercial on Brand B volume)? What is the total, direct and halo impacts of different ads onto total franchise and brand volumes?
  • Has TV delivery reached saturation point (point of diminishing returns)? What is the optimum range of weekly TV delivery to get maximum incremental volume?
  • Which commercial has a longer impact on buyers’ behavior?
  • How should TV and Print be scheduled to improve the media plan?
PRICE / TRADE / CP / OTHER
  • How sensitive is brand volume to price? How does pricing of individual sizes impact the total brand?
  • How much incremental dollar sales is generated for a million dollar invested in each Consumer Promotion tactic? Which are the most cost efficient promotion activities?
  • Which trade promotion tactic (Temporary Price Reduction, Feature/No Display, Display/No Feature, Feature & Display) is most cost efficient? What trade promotion vehicles work best? Which SKU has the strongest response to Trade Promotion?
  • How much of the new product volume is incremental to the brand? What is the level of cannibalization?
 
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