Professionals share their experience on marketing strategies
When developing a marketing plan, marketers can’t just rely on their intuition, they are encouraged to use quantitative information or marketing mix modeling to help make key decisions.
Marketing Mix Modeling (MMM) as defined by Nielsen, is a look at historical relationships between marketing spending and business performance to help determine business drivers and how much should be spent across markets.
The Marketing Mix—otherwise known as the four P concept, is a set of tools to pursue marketing objectives. The four Ps part of that concept includes: product, price, promotion and packaging.
“When you’re modeling, you’re trying to get information on the return on investment on those four pieces of marketing,” says Molly Soat, American Marketing Association, editor-in-chief. “Marketers are able to have a much better idea of what’s going on at shelf.”
Some marketing professionals use different starting points when it comes to MMM.
Erin Dullea, currently the marketing director at NJOY Electronic Cigarettes, has experience in the consumer products and pharmaceutical industries, and has been in the marketing field for more than 12 years.
“Whenever I’m jumping into a new marketing plan, there are a lot of resources I rely on from internal to external, but one of the biggest things that I always look at is competitive information. I think it’s important to have a grasp on what your competitors are doing,” Dullea says.
A lot of research for marketing is available electronically, through websites, social media and email lists.
“I try to do frequent store visits, which I find beneficial to understand what’s going on at shelf,” Dullea continues. “It helps me monitor the promotional activity, new products and any packaging design changes. I think another great resource for competitive data is my sales team and agency partners.”
Michael Wolfe, CEO and owner of Bottom Line Analytics has more than 30 years in the industry, on the client, consulting and ad agency side, and specifically with well-known names such as Kellogg’s and the Coca-Cola Company.
“You start with an outcome, which is usually retail sales,” Wolfe explains.“That outcome is overtime. It’s preferably weekly. Then you overlay on that every possible quantitative driver of that outcome. So it’s a retail price factor. A market penetration of distribution factor. All of the advertising and media across all channels—TV, print, radio and digital, promotions.”
Wolfe continues, “These are all lined up in time and econometric models that link those drivers to the outcome. In the end, you can monetize each of those. What kind of revenue or sales are those generating and how much you spent on each of these activities and therefore you can kind of play games and move the dollars around to make the dollars more productive.”
When Dullea is looking to either expand her advertising or find which avenue to take, she works closely with a media agency to devise a plan.
“We zone in on specific targets using demographic data as well as focus in on our top markets or markets with high opportunity,” she explains. “After analyzing each market we’ll look at the GRPs and figure out what marketing mix makes sense.”.
Dullea says it’s also helpful to have data available before, during and after the advertising to help track results.
Changes in the mix
“I have not seen much change,” Wolfe says.
Marketing Mix Modeling has been around since the 1990s when an agency, J. Walter Thompson popularized the concept. Wolfe hasn’t seen much change in MMM in his 30 years.
“There might be little bits of changes here or there, but there hasn’t been a lot of change,” Wolfe continues. “And over this period of time there’s been a tremendous amount of change in the marketplace. There’s been an on slot of digital media and digital activities going on, but it has not adapted to it.”
Wolfe sees shortcomings when it comes to MMM and offers many solutions to industry professionals.
Wolfe says, the omissions in MMM include that MMM focuses on the short-term impacts of the media and doesn’t measure long-term. The models only measure the impact of ad gross rating points (GRPs) and not the ad message, it doesn’t account for bias in attribution, especially with digital media, MMM doesn’t quantify the synergies across media channels, and MMM excludes “the voice of the customer,” failing to provide insight based on the customers brand experience.
The solutions Wolfe gives to these omissions are:
- Expand the measurement focus towards quantifying the longer-term effects of marketing and develop more accurate ROI estimates.
- Focus more on measuring the effectiveness of ad messaging to better align and advance marketing strategies.
- Adapt its method to avoid the pitfall of “last touch attribution.”
- Measure the interactions and synergies that exist within the marketing-mix, in order to form a foundation for integrated marketing.
- Put the “voice-of-the-customer” front and center in models in order to more fully understand the customer’s perspective driving business performance.
“I’m not saying there’s been zero change—there’s been some methodological changes along the way, but nothing of substance,” he concludes.
Dullea feels that keeping up with the trends is a must when it comes to change.
“To me, it always depends on the categories and products, but yes,” she explains, “keeping up with the trends and seeing what everyone else is doing in their marketing mix is very helpful. It’s made it slightly more difficult to plan long term, but the major benefit of the digital environment today is that it’s very easy to make quick revisions. Likewise, it adds multiple touch points to really zone in on a market.”