CHAPTER 11

MARKETING MIX MODELING

Francesco Banfi, Rishi Bhandari, Jonathan Gordon, Andris Umblijs

Retailers have privileged and powerful access to consumers – especially through promotional activities and loyalty programs. These instruments are direct purchase decision drivers, but they are also highly targeted communication channels, since both the message and execution can be tailored to the needs of individual regions, clusters, outlets, or even consumer segments. Their effectiveness makes them key elements in any retailer's marketing mix.

In Chapter 10 we discussed the Reach–Cost–Quality (RCQ) approach as an established and pragmatic way to evaluate and balance the role of a wide range of traditional touch points, comparing them on an “apples-and-apples” basis. By comparison, marketing mix modeling, or MMM, is a more analytically sophisticated and more powerful tool. It helps retailers create a comprehensive fact base for advanced marketing allocation and activity decisions. Based on econometrical modeling, MMM enables retailers to measure the performance of their current marketing mix and optimize it across advertising vehicles and other touch points, including unique retail levers such as pricing and promotions.

What it is: Marketing mix modeling tells you how to spend it

It's all about the look. You want your ads to look good on the TV screen, your products to look good on the shelf, your brands to look good in the consumer's mind – and the bottom line to look good on ...

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