A constant concern for any brand is understanding the real impact of its marketing efforts on sales.
For which there is the Market Mix Modeling technique. This analytical technique is used in marketing to measure the impact and effectiveness of different marketing variables on the sales or results of a company. The main objective of an MMM study is to understand how various marketing activities, such as advertising, promotions, distribution, pricing and other factors, influence sales and profits.
Benefits of the Market Mix Modeling study
- Budget Allocation: You can optimally allocate your marketing resources, determining which marketing activities generate the greatest returns and how to redistribute the marketing budget most effectively.
- Optimization of the marketing mix: It allows us to identify which combination of marketing variables, such as advertising in different media, promotions or price levels, maximizes the company's sales and profits.
- Performance evaluation: Provides an objective view of the past performance of marketing activities and allows you to evaluate the impact of past decisions on sales and profits.
- Sales Forecasting: MMM models can be used to predict the likely impact of changes in the marketing mix on future sales, helping companies make informed decisions about long-term marketing strategies.
- Identification of synergies and cannibalization effects: MMM analysis allows us to understand how different elements of the marketing mix interact with each other and if there are synergy or cannibalization effects between them. This helps avoid counterproductive decisions and maximize overall results.
How is a Market Mix Modeling study applied?
We begin by understanding the business flow thanks to the analysis of the Customer Journey, in this way, we are able to identify which steps of the funnel or process each of the levers of the business influence and determine the necessary models to obtain a more precise measurement of the impacts. advertising. These models are based on a modeling scheme that allows defining what specific data is necessary for their development.
After defining the schema, you can begin collecting information and processing the data. In any analytics project, this phase is crucial because the quality of the data will be decisive for the results of the analysis. The different data sources are collected through ETL (Extraction, Transformation and Loading) processes, with the aim of achieving an optimized database on which the necessary models will be developed.
The models are made on the KPI's (Key Performance Indicators) that refer to those variables that we identify as necessary to evaluate the effectiveness of a marketing strategy.
Let's remember that the objective of an MMM is to explain the behavior of those KPIs based on the different parts of the business. Regardless of the model chosen, the result obtained is an equation capable of estimating the behavior of the analyzed variable. The closer this estimate is to reality, the more robust the model will be.
In summary, a Market Mix Modeling study is a powerful tool for understanding and optimizing the impact of marketing activities on business results, allowing companies to make more informed and strategic decisions about how to allocate their marketing resources.
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