Marketing is the most important function in an organization yet it faces the wrath of the management when it comes to budget allocation and outcomes. Marketing mix modeling helps bridge this gap and estimates the marketing return on investment (MROI) and enables marketing mix optimization. Marketing mix model is a statistical tool that analyzes the impact of past activities, identifies present trends and forecasts the impact of marketing variables for the future. Marketing mix modeling (MMM) helps measure the impact of the four marketing variables or the 4Ps of marketing mix that are as follows: Price, Product, Promotion and Place. MMM majorly emphasizes on the promotional activities and helps understand the performance of marketing strategy.
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Marketing strategies facilitates the organization to drive a desired customer action, leading the customer to the end goal i.e. sales or conversion, with a combination of various media touchpoints. It is known for a fact that an organization cannot solve its problems with the help of simple descriptive statistics and required in-depth information from credible sources in order to facilitate strategic decision making. Organizations leverage marketing mix modeling and other advanced marketing analytics tools to devise its marketing strategies and optimize its marketing spend. They also realize that marketing mix modeling combined with advanced marketing analytics tools helps them to test the impact of marketing campaigns, determine alternative strategies and evaluate media channel options, thereby yielding desirable outcomes.
Marketing Mix Modeling and the Hype Around it
Marketing mix modeling enables the marketing professionals to identify the factors that yield the desirable outcomes, categorizing these into external and internal, which provides insights to plan the budget, allocate funds and manage marketing spend activity. Marketing mix modeling is overhyped they say, but rightly so it deserves the attention as it enables the management to find answers to these strategic problems such as-
- Identifying key drivers and its contribution on overall sales and evaluating the competitor’s activity on company’s sales.
- Marketing mix modeling helps in determining the impact of various promotional activities on own as well as competitor’s brands, and identifying media channels that give an increased marketing return on investment (MROI).
- To evaluate the performance of traditional and digital mediums and identifying the campaigns that perform better, thereby deciding strategies for both the channels.
- Marketing mix modeling helps in new product development as it identifies the favorable marketing factors and optimizes the marketing mix.
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Marketing mix modeling drives a better understanding of the marketing activities and their performance at a global level, thereby enabling the marketing professionals to devise marketing strategies, allocate funds and plan the budget. Every industry is aware of the benefits of marketing and promotional activities and they leverage the insights provided marketing mix models and other advance marketing analytics solutions to drive sales and conversions. The selection of the right advanced marketing analytics tools depends on the type of data available, source of information and its intensity that helps in understanding various aspects of marketing mix and thereby managing marketing spend and optimizing the marketing mix.