Marketing Mix Modeling
Why only measure ROI on you customer campaigns when you have the opportunity to measure the ROI on all your marketing activities using Marketing Mix Modeling?
Marketing Mix Modeling involves simultaneous analysis of your marketing and promotion activities along with other factors affecting sales performance to determine the efficiency of each element in your marketing mix.
Basically, total sales data is decomposed into two main components which are Base Sales and Incremental Sales. Base Sales is the natural demand for the product and is influenced by external factors such as: competitors, economics and seasonality. Incremental Sales is the demand for the product influenced by internal factors such as marketing and promotion activities. Incremental Sales is decomposed to the level of existing data e.g. Television, Radio, Print, Direct Mails, Internet etc.
In the end Marketing Mix Modeling will help you answer questions such as:
• Which of my marketing elements delivers the greatest sales and profit?
• Is there an opportunity to reallocate spending across my marketing activities to improve profit?
• What has driven my sales gain/loss in the most recent period?
• What level of advertising generates the highest ROI?