Importance of Marketing Mix Modeling for Retail Industry
A recent survey of several digital advertising decision-makers, including CMOs at some of the largest retailers in the U.S., found that despite the marketing mix being held accountable for growing sales and market share, roadblocks such as increased demands, organizational challenges, and external market forces are impeding success.
Marketing mix modeling acts as a decision-making tool that retail industry players can leverage to figure out an optimal spend allocation strategy. It is the process of quantifying the impact of each marketing vehicle in terms of its marketing effectiveness and ROI. Doing so can help create a roadmap for their future strategy by defining how to plan and adjust their marketing budgets, as well as other tasks such as pricing and distribution strategies.
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The client is a well-known player in the retail industry in the United States.
Project Background and Solution Offered
In a highly competitive retail market space there are many factors that affect sales revenue. A marketing mix strategy helps to examine the major factors which are responsible for explaining the sales variation in a given period by categorizing them into- base factors, macroeconomic factors, and promotions. Constant sales variations due to several such factors prompted a retail industry player to leverage marketing mix modeling techniques to examine the major factors affecting their sales over of period of time. The client also wanted to use Quantzig’s marketing mix modeling (MMM) solutions to measure the impact of their marketing investments on sales and optimize marketing spend.
The requirements of the retail industry client were quite specific, and to meet them our marketing mix modeling experts collaborated with the client’s team to evaluate the impact of their marketing strategies and develop ROI simulators for scenario analysis and planning. A detailed assessment of the marketing performance of different media platforms offered detailed insights into media contributions and insights. Also, by employing a team of experts with a clear understanding of the client’s industry we offered tailored marketing mix modeling solutions to help them gain accurate insights into the ROI of their marketing efforts, understand the impact of changing their marketing strategies, and to measure the effectiveness of their overall marketing campaigns.
Value Delivered to the Client
With the objective of helping the retail industry client understand the factors affecting their sales margins, we deployed a team that offered personalized marketing mix modeling solutions. Within four weeks of deploying the new marketing mix strategy, the client witnessed a 10% rise in their sales margins. The marketing mix strategy also enabled the client to perform a ‘What-If’ analysis to appraise the possible results of marketing budget reallocation scenarios. Moreover, the marketing mix strategy enabled the retail industry client to turn the data on impressions, clicks, and conversions into actionable recommendations. This offered detailed insights into marketing budget allocation, marketing decisions, defending marketing budgets, budget approval, and investment options to maximize ROI.