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market mix modeling

Market Mix Modeling is Not Just a Black Box: Decoding the Myth with Quantzig’s Marketing Analytics Services Leader Aviral Sinha

Aviral Sinha, Manager (Business Development Operations) and an Analytics Services Leader at Quantzig has over 5 years of cumulative experience across multiple types of analytics engagements including advanced customer and marketing analytics, price optimization, sales analytics and BI solutions. He has played an instrumental role in providing actionable analytics-based insights for clients across multiple industries including Healthcare and Life Sciences, Retail, CPG, Food and Beverages, and Telecom.

With the introduction of digital media into the marketing landscape, gaining proper insights into campaign effectiveness and properly attributing the performances of each channel has become increasingly difficult. The growing demand in the emerging economies and saturation in developed countries has created a rapid shift in the market dynamics across the globe. Consequently, enterprises face immense difficulty in devising market expansion strategies to gain and retain market shares, optimizing its marketing investment, and identify revenue driving opportunities. Market mix modeling (MMM) helps businesses evaluate their past marketing activities and forecast the marketing return on investment (MROI) based on data driven insights. Also, market mix modeling enables organizations to bridge the gap between the marketing spend and the bottom line. 

Quantzig’s marketing analytics solutions help companies to optimize marketing campaigns and make better business decisions that improve ROI. Request a FREE proposal now to gain better insights into our portfolio of analytics services.

Is market mix modeling a black box?

Aviral: Absolutely not! Since marketing mix modeling involves advanced statistical analysis of vast volumes of data, it can appear to be obscure process to non-practitioners. Some have accused marketing mix of being a black box, with inputs going in and results coming out with no transparency to the process. Without a clear understanding, how can one know if the model results are accurate? Though it is certainly a complex methodology, marketing mix is not a black box.

Rather market mix modeling is a proven analytic approach that incorporates science with business acumen to drive actionable insights. Today businesses are leveraging marketing mix modeling channelize spending to media with better ROI and optimize the media mix based on consumption patterns. Furthermore, market mix modeling solutions can help in improving customer targeting based on demographics, including indicator variables to control for seasonality and funnel effects. As a result, companies leveraging market mix modeling can develop a multi-channel strategy to execute and measure campaign across digital channels and improve conversions.

What are the current challenges in market mix modeling?

Aviral: In my opinion, evolving markets are leading to more competition, more products, more options and this has created a challenging marketing environment. Therefore, identifying and collecting data that is completely different from internal and external sources such as marketing, sales, advertising agencies etc. has become very difficult for businesses. Also, companies are facing difficulties in dealing with selection biases in ad targeting based on interest, seasonality in demand, and funnel effects that creates challenges in specifying market mix models. Another major challenge is the emergence of a complete digital landscape which has created a newly empowered customers with diverse personal interests.

Our market mix modeling experts help leading organizations to integrate data across all marketing channels and consolidate it into a common marketing view. Get in touch with them right away.

Is market mix modeling biased to promotions and fails to capture the true effects of advertising?

Aviral: Certainly not! Marketing mix is not biased toward promotions. However, some businesses, especially CPG, tend to be drawn into a promotion-heavy strategy. When promotions are applied over the long term, it is known as deep discounting. While these discounts may help the business and retailer in the short term, neither party flourishes in the end. A deep-discounting strategy conditions consumer to buy on deal, leading to a devaluation of the brand and the category and eroding margins for both the manufacturer and retailer.

Marketing mix is certainly not the cause of this situation, but it can be a part of the solution. Market mix modeling approach helps in identifying opportunities for the manufacturer and retailer. High-return promotional events can be prioritized in a way that does not erode margins in the longer term.

Our customized market mix modeling solutions help businesses gain accurate insights on the ROI of their marketing efforts and measure the effectiveness of various marketing channels. Request a FREE demo below to know more.

What is it that companies should do to be future ready?

Aviral: To start with, some offline channels like TV are great for driving new customers to your online shop when considering the effects of investments in such channels it makes sense to try to measure the effects of these advertising on website traffic. What I am trying to say here is that the combination of both traditional and digital media options for advertising had led marketers across the globe to explore creative ways of attributing sales across channels. Organizations of the future will drive marketing excellence by connecting the online and offline journey with the help of the marketing analytics. Unique identifiers such as loyalty cards, email receipts, coupons and phone numbers can help in identifying and tracking a customer offline. Tracking an offline sale to the unique ID of a customer using data from their browsing history and location can help in attributing the sales to online touchpoints. By leveraging marketing analytics solutions, organizations will close the loop by integrating customer segmentation and market mix optimization and allocation under the same umbrella to develop a holistic marketing strategy.
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Marketing Mix Modeling: Top 10 Success Stories that Will Help You Decide If You Really Need It

In today’s competitive landscape, businesses find it difficult to measure marketing effectiveness. Understanding the future impact of a change in marketing metrics and optimizing investments to drive sales and profits for profitable customer segments is challenging for most companies. Moreover, the impact of operational factors and external factors such as weather, macroeconomic factors, and aggravating competition is increasing the marketing spend for businesses.

If investments are not optimized and analyzed properly, companies cannot identify their key drivers of profit, sales, and performance. Therefore, marketing managers need to take marketing mix modeling into account, to set the right foundation for their marketing initiatives and branding solutions.

Marketing mix strategy has the potential to streamline marketing activities to maximize revenues, profits, and predict sales while simulating various scenarios.

At Quantzig, we understand the impact that marketing mix modeling can have on your business. And to help companies bost marketing efficiency, we have listed below some of our top success stories that have helped numerous companies to implement an effective marketing mix modeling technique to maximize ROI.

Marketing Mix Modeling Success Stories

Success story #1: Marketing mix modeling paved the way for precise marketing mix strategyAnalyzing the key components of the marketing mix is a pre-requisite when it comes to developing a solid marketing mix strategy. Don’t you agree? Marketing mix modeling comes to rescue here as it did for one of Quantzig’s clients. By leveraging marketing mix modeling solutions, the client was able to use multiple regression techniques. Furthermore, this helped them predict the optimal mix of marketing variables and develop a rigid marketing mix strategy to persuade their customers to act immediately.

Success story #2: Marketing mix modeling paved the way for a 50% boost in ROI:Want to avoid wasteful spending and suboptimal results in your business? If yes, then this success story can inspire you. One of the Quantzig’s clients was facing issues boosting their ROI and approached Quantzig to leverage our expertise in offering industry-leading marketing mix modeling solutions to examine the relationship between marketing mix elements and performance measures. Our marketing mix modeling solutions proved useful for the client, especially in ascertaining the effectiveness of each marketing input in terms of ROI and this boosted returns to 50%.

Driving Market Advantage with the Help of Marketing Mix Modeling – A Retail Banking Case Study

Success story #3: Marketing mix modeling optimized the incremental value of investments: With the aid of marketing mix modeling, it becomes easy for any company to analyze the incremental value of investments. Do you want to know how? Our latest success story can shed light on how Quantzig’s marketing mix modeling techniques integrated both digital and traditional channels through the effective allocation of marketing budgets. With the help of marketing mix modeling, it becomes easy to gain actionable insights into the impact of the marketing campaigns across various business segments. Furthermore, marketing mix modeling is also very helpful when it comes to budget optimization, channel and campaign ROI analysis.

Analyzing the Incremental Value of Investments Through Marketing Mix Modeling for a Gourmet Food Retailer

Success story #4: How can marketing mix modeling can transform your business? Marketing mix modeling is the best way to evaluate past marketing outreach activities, forecast the return on investment, and measure its impact on the overall sales. It allows companies to gain actionable insight into market variables and their impact on sales. Irrespective of the industry in which the business operates, tmarketing mix analysis allows organizations to make strategic business decisions, identify opportunity costs, and optimize marketing strategies.

Marketing Mix Modeling Transforms the Healthcare Industry

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Success story #5: Marketing mix modeling quantified the impact of sales on marketing activities :Do you think quantifying the impact of sales on marketing activities is a tough nut to crack? Well, not anymore! Marketing mix modeling solutions can help you do so very easily as it did for one of Quantzig’s clients. Marketing mix modeling provided assistance to the client in understanding the impact of online media on sales and optimizing investments to drive profit. Furthermore, marketing mix analysis proved beneficial in measuring the potential value of all marketing inputs and make investments to increase long-term revenue.

Marketing Mix Modeling: How Quantzig Helped a Prominent Client in the CPG Industry Optimize their Marketing Spend

Success story #6: Leveraging marketing  mix modeling to reduce marketing spend significantlyThe key advantage of leveraging marketing mix modeling solutions is its go-to-market research evaluation approach. This is what formulated the way for better savings since Quantzig’s marketing mix modeling solutions quantified the effectiveness of marketing channels in terms of revenue, incremental sales, ROI, and contributions for the client. Furthermore, it also unlocked the business potential and reduced marketing spend significantly.

Marketing Mix Modeling Helps an Electronics Retailer Reduce Marketing Spend

Success story #7: Why is marketing mix modeling inevitable for your business? Marketers often face the challenge of correctly determining and analyzing the effectiveness of their campaigns across offline and online marketing channels. Ideally, marketing strategies are concocted by using primary and secondary media research, but if you do not measure the marketing effectiveness efficiently, you might be missing out on some vital information. This is where marketing modeling mix helps and therefore, ignoring it is not at all recommended for businesses if they really want to stay ahead in the competition.

Why is Marketing Mix Modeling Inevitable for Your Business?

Success story #8: Marketing mix modeling offered a real-time solution for investment decisionsMaintaining and increasing market share on the basis of optimization of marketing spends is a real challenge that almost all businesses face. This is the problem that one of the clients of Quantzig also faced and marketing mix solutions helped them effectively. With its ability to analyze various data such as sales data, market-level media measure, variable marketing expenses, fixed marketing expenses, and economic and purchase funnel indicators, it provided the management with a decision support system and analyzed the sales at the granular level.

Marketing Mix Modeling Helps a Leading Bank Gain a Holistic Overview of Their Marketing Spend

Success story #9: What are the thumb rules of marketing mix modeling? Marketing mix modeling may include a vast range of marketing variables; however, companies must understand that it does not follow a ‘one size fits all’ approach. Every brand is unique and so are the variables impacting that particular brand. The thumb rules such as setting realistic levels or base line, avoiding hasten decision making, understanding the underlying factor behind growth, maximizing participation and involvement across all channels of an f organization, can help companies boost their ROI to an optimum level.

The Heuristics of Marketing Mix Modeling (MMM)

Success story #10: Marketing mix modeling laid mechanism for comparative ROI analysis :In this era of technology, understanding the impact of media investments at both national and local levels for products or services is very crucial for companies. Don’t you feel so? Marketing mix model can assist companies in improving the ability to quantify the marketing effectiveness of various media channels and events in terms of ROI and revenue. Furthermore, it can also contribute to synergy analysis to identify the direct and indirect effect of media types on incremental sales.