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Sales : Oct 11, 2017 12:00:00 AM
In the days of traditional marketing, the marketers knew how their efforts accounted for sales. But this is not the case anymore. With so many digital channels it is becoming more and more difficult to measure the efficiency and impact of marketing initiatives. Now, the marketing activities are spread across traditional and new age channels. With the increase in the number of channels, there is a resultant increase in the number of possibilities and accordingly an increase in the number of challenges. How to know which campaigns & activities are working and which are not? For this, you can always use the evergreen method of calculating ROI:
If you think that this should be suffice, then there are just three questions you need to ask yourself:
This is where Market Mix Modelling (MMM) comes into the picture. MMM is a technique to answer all these three questions with the power of Big Data analytics.
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Marketing mix modeling is a data analysis technique in which past company data is analyzed to quantify the impact of various marketing activities on sales. This data includes information from Google Analytics, point-of-sale systems and company’ internal reports. A statistical technique called regression analysis is used identify linear and nonlinear relations between the marketing activities and direct sales. MMM measures the efficiency of all the marketing elements in following terms:
These insights are then leveraged to adjust marketing activities to maximize revenues and profit and predict sales while simulating various scenarios. Advanced Market Mix Models may also include multiple products or brands competing against each other to analyze the cross-price relationships and advertising share of voice. The insights can be used to identify their impact on the market as a whole and individual companies in it.
Read More: How to identify the right pricing for your products using Big Data?
Market Mix Modelling divides the sales into two parts - base sale and incremental sale. The base sales is the natural demand for a product which is built due to prior market reputation, pricing, product quality etc. Incremental sales are the sales generated due to marketing activities. The MMM model is created to analyze the impact of four main marketing channels - media and advertising, trade promotions, pricing and distribution activities. These categories can be further silted into more minute segments based on the business needs and activities.
To create a successful model for analyzing marketing activities, various hypothetical models are created and then validated. Here are the exact steps that are followed to create market mix models:
Read More: How create a recommendation engine for your business?
Even after these complications market mix modelling is a very effective technique. If used properly, it can be very fruitful for business. Not only this model gives insights into current operations but it also guides the decision making in future. If you are looking for a company to help you use business analytics at scale then feel free to contact us.
Node.js, a platform based on Chrome's JavaScript motor assists with growing quick, adaptable system applications. It utilizes an occasion driven,...
What could be the ultimate goal for each business person? Increase the number of sales!!! In any case, driving traffic and offering amazing...