Benefits of Marketing Mix Modeling
Marketing Mix Modeling has been used for many years now and has been able to help marketers significantly improve their marketing budget allocations and other key tactical marketing decisions. It has led to many improvements for many companies in how they drive revenue, profit and share, helping marketers to choose creative campaigns and many other critical tactical decisions. They allow analysts to relatively easily deliver models that support budget allocations and diagnostics to drive more revenue out of their hard-won marketing budgets.
Challenges of using Marketing Mix Modeling
One of the biggest challenges in modeling is on the data. Now in the US and elsewhere Nielsen and IRI and others have developed cost effective means to provide (at reasonable cost) sales, price and distribution, and in-store data on a weekly basis across the category.
Pitfalls of Marketing Mix Modeling outside of the US
Outside of the US and the major countries in Europe other factors come into play - in particular coverage and granularity. In Russia, for example, data covers about 40% of the retail sales volume and is often concentrated in the major cities. In addition, the data is available only on a monthly or even bi-monthly basis - making it nearly impossible for traditional, statistically based MMM's to provide hard and fast answers.Using Agent-Based Modeling and Simulation
A new technique based on agent-based modeling, where agents represent virtual consumers, is now gaining momentum and is a viable alternative in these data-stressed countries and categories. Because the agent-based modeling is based on consumer choice, even in the face of less than stellar data they can deliver robust results in order to improve a marketer's strategic and tactical decision-making.
If you'd like to learn more give me a ring. I'd love to hear from you.
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