Some Key Marketing Mix Modelling Elements & Terms

In MMM, we analyze the marketing tactics and find out which marketing tactics are giving more ROI, after analyzing we shift the money from low ROI providing tactics to high ROI providing tactics and optimize the marketing budget. Following key marketing terms will help you in understanding the marketing strategies and proper analyses of them;

Base Sales and Incremental Sales

You need to differentiate your sales into the base and incremental to proper analysis of your MMM metrics.

Base sales are the outcome of brand equity and the reputation your brand has built for years. These are the result of brand and consumer loyalty that you’ve gained in the market. Loyal consumers promote the business without any external push, so this happens naturally. Base sales are constant for a long period of time until there are some changes in economic and environmental variables because these are the result of brand equity and awareness.

In simple words, the natural demands of your products or services in the marketing without any advertising are considered base sales.

On the other hand, Incremental Sales are those results you get directly through marketing tactics and advertising. MMM analyses incremental sales and then optimizes the campaigns according to these sales.

Incremental sales are generated through various means such as print advertisements, TV advertisements, digital spending on digital marketing, promotions, inbound marketing, content marketing, social media marketing, etc.

Some of the Important Base Variables are;

  1. Price: Base Price ( Undiscounted Price), Average sales price (Discounted Price)
  2. Distributions: Assortment (No. of Stock Keeping Units in a store or market), velocity (the rate at which the product is moving), number of stores and locations at which the product is available.
  3. Seasonality & Holidays: If you want to know more about seasonality and holidays then you can read our blogs on “Seasonal Marketing”, and “Holiday Marketing”.
  4. Macroeconomic Variables: such as inflation, GDP, unemployment rate, purchase power, growth rate, consumer sentiment, etc.

Some of the important incremental variables are;

  1. Above the Line (ATL): These are non-targeted and have a wide reach. The objective of ATL activities is to build brand awareness and familiarity and help in brand building. Examples of ATL are radio advertising, television advertising, print advertisements in magazines and newspapers, product placements in cinemas and theatres or billboards, etc.
  2. Below the Line (BTL): It is very specific, memorable, and targeted. BTL is focused on conversions than brand awareness. It is also called a direct marketing strategy. Examples of BTL are discounts, SMM, sales promotions, in-store marketing, email marketing campaigns, events, conferences, etc.
  3. Through the Line (TTL): TTL is very much effective as it uses the integration of both marketing tactics ATL and BTL for better results and provides 360 marketing solutions for everything from brand building to conversions. It uses the sum of all the marketing tactics of above the line (ATL) and below the line (BTL).

Behavioral Metrics

Behavioral metrics include several touchpoints of several stages, repurchase rates, and other behavioral metrics. These provide deeper insights into customers.

Budget Optimization

As the MMM analysis is done for the purpose of optimization of marketing strategies. Budget optimization is the technique of optimizing future marketing spending to maximize the effectiveness and ROI of the strategies.

MMM provides us with a report about the effectiveness of the channels of marketing. Budget optimization helps us in shifting the money from low ROI channels to high ROI channels. This way we don’t need an extra budget for better results.

Cannibalization Effect

It’s always said, big fishes eat small fishes in the sea, and the same happens in the field of marketing. If a brand is having more than one product in the same category, then both products would negatively impact the sales of each other. This negative impact of the products on other products is called the cannibalization effect.

It’s also an important marketing mix element that needs to be considered while performing analysis.

Competition

If you want to stand like an authority in the market, you need to outsmart your competitors. The best way to do this is to follow what they’re doing for their users and provide so much better products, services, and consumer experiences to the users.

Always consider both of your competitors whether it’s direct or indirect. Direct competitors are the brands and businesses that have the same products and offerings. Indirect competitors don’t offer the same products and services but are an alternative to the main product.

Contribution Charts

Contribution charts show the percentage of sales achieved through each marketing input or tactic. After defining the contributions of each marketing enough you can easily compare the effectiveness of each marketing input.

Deep Dives

Deep analyses represent the analysis on deep levels such as genre, language, methods, creatives, channels, budget spending, etc. It helps in budget optimization and shifting the investment from one input to another input.

Diminishing Returns and Decay Effect

Let’s understand it with an example, you are running an advertisement for your business, it’ll work well sometimes, but if you’ll start running only a similar campaign again and again without any optimization or changes, the sales will start diminishing and after a while will become constant, that’s called diminishing returns.

So, keep optimizing your Marketing Mix Modelling Campaigns over time.

The decay effect is also called a carry-over effect. In this effect, past advertisements impact the present sales of a brand. As something from the past is being carried to the present, so it’s called the carry-over effect.

Discounts

Discounts also affect sales, so the impact of discounts on sales should be measured while performing an analysis.

Distribution

Distribution plays an important role in MMM. As all the focus of MMM is on optimizing the effectiveness of marketing inputs and ad spending, what if the distribution of the products or services isn’t done well?

So, you also need to optimize your distribution systems as well. Distributions of resources to each marketing channel or stock-keeping units to the stores and locations should be proper and effective.

Halo Effect

The Halo effect shows the awareness, strength, popularity, and loyalty of the brands among their target audiences. This is the result of the previous positive and memorable experiences consumers have with the brand. You can build such experiences with your consumers with the help of “Empathy in Marketing”. So, measure the halo effect also into the marketing mix modeling.

Market Trends

What’s trending in marketing is on everyone’s tongue! Understanding market and marketing trends will help in understanding the demand for the products or services your consumers have.

Media Activity

What’s being shown on media channels also impacts the sales of any brand. As media reports change consumer sentiments, consumer sentiments are a big factor in the sales of any brand. So, focus on what’s being shown in the media currently.

Multi-linear Regression

Let’s first discuss what linear regression is!

It’s a type of analysis in MMM showing the relationship between dependent variables and independent variables (predictors). The relationship is linear when it’s being defined between one dependent and independent variable but when it’s defined with multiple independent variables it’s called multi-linear regression techniques.

Dependent variables can be anything that is dependent on predictors such as sales or market share. There are so many independent variables from traditional and digital mediums such as SMM, Advertising, PPC, distribution, price, TV spending, print advertising in newspapers and magazines, website visitors, outdoor campaign spends, and all types of campaigns (ATL, BTL, and TTL), etc.

As we can see there’re many independent variables, so it’s called multi-linear regression. It’s the core principle in Marketing Mix Modeling.

Defining the relationship and performing multi-linear regression can help you in determining the effectiveness of the tactics and optimizing the marketing strategies.

Seasonality & Holidays

Seasonality and holidays impart a big role in the ROI and sales of any brand. Sales are increasing these days because of the offers, sentiments, or environment. The sales of products and services differ in every season and during holidays because people wait for them to come, to enjoy quality time with family and to get a decent discount on the products and services they want.

Measure your seasonality and holiday marketing key performance metrics (KPIs) to empower Marketing Mix Modelling, and if you want to know more about what seasonal and holiday marketing strategies are then you can visit the blogs on “Seasonal Marketing” and “Holiday Marketing”.

Social Metrics

Social media channels impart a big role in the growth of any platform and you can easily find and target your target audiences on more than one social media channel. You can use social media channels as social listening tools and can get to know about the consumer’s sentiments toward your brand. Social media platforms are a better option for brand awareness as well as conversions.

You can measure the social metrics with the followers and engagement data such as comments, views, subscriptions, tagging, brand mentioning, referring, etc.

We’ve so many key marketing mix modeling elements and terms now. So, are you fully aware of what you need to research in the marketing mix? It’s basically a marketing strategy in which you first measure the performance of every marketing strategy and then optimize those marketing strategies.

It wouldn’t be unjust to say marketing mix modeling is an optimization model more than a marketing strategy.

Unlock the potential of key Marketing Mix Modeling elements with Digiavtar, the top digital marketing agency in Gurgaon. Elevate your strategy with expertise, precision, and measurable success.

Comments

Post a Comment

Popular posts from this blog

Benefits of Blue Ocean Marketing Strategy It’s easier to talk about than implement but when implemented properly we can reap the benefits of any marketing strategy.  The benefits of the blue ocean marketing strategy are; Grounded in Data Step-by-step process Avoid saturated markets maximizes opportunities while minimizing the risks pursues differentiation and low cost creates uncontested market spaces Explore unexplored market spaces Creates personalized experiences for consumers A win-win situation for both people and brands, brands get higher revenue and growth while people get customized products and solutions to their pain points. Have growth potential from the value brands provide through this Increase in word-of-mouth marketing as the consumers praise the value Increment in conversion, sales, and revenue with no competitors in the market Exponential Growth in the Business So, which benefits are luring you to apply this strategy to your brand? You can even implement it in ever...
Read more
  What is SMS Marketing? SMS Marketing is a type of marketing strategy in which marketing messages such as promotional and transactional are sent through text messages ( SMS ). Everyone receives a lot of text messages in a day regarding offers, discounts, updates, and transactions. Sometimes we get a lot of text messages but I’m sure everyone opens every text message at least once to check if there’s something valuable, this makes text messages one of the most popular forms of marketing strategy in terms of engagement. The other reasons behind the highest open rates of text messages are we see our mobile phones at least 344 times a day, and 70% of people prefer communicating with their favorite brands via text messages. Because of the use of mobile phones and text messages,  SMS Marketing  is also considered a mobile marketing strategy. As we’ve already discussed that the open rate of text messages is 98%, and for email marketing, it is 20 percent. But you’ll be shocked t...
Read more
What are Emotions and Emojis? Emojis are dominating everywhere, in every sale, website, ad, and social media copy. But the use of emojis didn’t start just a few years back, it’s been used since the 80s as emoticons. Emoticons can be said as the ancestors of emojis. There were no smartphones in the 80s and 90s, so, people started to show emotions by combining certain keyboard characters to make emotional facial expressions. On the other hand, emojis are small pictures made up of pixels. They are not only limited to facial expressions but are also used to showcase activities and objects. In every New Year and in every field, new emojis are designed and added to smartphone keyboards. Even though emoticons inspired the innovation of emojis but they’re two different things. We’ve seen that emoticons are made up of only keyboard characters but emojis are small pictures made up of pixels. Emojis look more realistic than emoticons but both have their own places in the world. Let’s see some of ...
Read more