Marketing teams in most CPG organizations mostly use primary and secondary research data available, to optimize their marketing strategy. While this is important, you may be missing an important piece of the puzzle if you’re not taking into consideration the effectiveness of your marketing outreach too. A holistic and effective marketing strategy would also measure and track parameters like:
- The type of media used
- The effectiveness of each channel
- The effectiveness of different campaigns
- Best media environment to use
- Sales uplift and ROI generated by different types of media
- At what frequency do the ads need to be renewed
This process of using such statistical data to analyse the past influence of marketing spend on the sales and making informed decisions about the marketing strategy going ahead, is called Marketing Mix Modelling (MMM). Hence, Marketing Mix Modelling forms the bridge between parameters such as marketing spend & sales achieved and eventually improves the return on investment across marketing activities.
Consumer Packaged Goods or CPG sector, is one of the foremost sectors to have successfully adopted the concept of Marketing Mix Modelling. Pressure inducing, industry specific factors such as – low contribution margins, increased competition, and low level of brand loyalty among customers are the key reasons for manufacturers and retailers to invest in statistical analysis of data. Especially in the case of larger brands where they have expansive geographical reach and numerous SKUs and a large mix of marketing mediums, having a Marketing Mix Model solution helps draw insights from the collected data and adjust the marketing mix accordingly in real time.
An ideal MMM solution helps quantify the impact of standalone marketing activities on revenues, volumes and price of products sold in the market. It calculates the relative ROI of various marketing decisions and helps management in creating an optimum marketing mix. It provides insights on following:
- An MMM solution helps identify the key factors that drive performance, which can then be segregated into internal (advertising, market research, trade promotions) and external factors (pricing, seasonality, weather, consumer trends etc.).
- By analysing impact of various marketing mediums (Television, Internet, Mobile etc.) on revenues, MMM provides insights to reallocate resources to form optimum marketing mix.
- MMM also helps in predicting the potential effects of proposed marketing actions, on revenue and provides insights on which the final decision can be based. It helps find answers to questions like what is the optimal amounts of marketing and sales funds, how budget reallocation influence revenues and profits, how will it affect the competitive position of brand, what is the forecasted sales among others.
- An optimum MMM solution also helps managers understand the trade-offs they face, by identifying marketing activities that affect organization differently i.e. ones that impact revenue (short-term) and the ones that affect consumer price perception (long- term effect on brand equity).
Given the sensitivity of the sector and the significance of the data analysed and insights derived, it is imperative for your Marketing Mix Modelling Solution to be quick and agile in capturing, collating and studying data to draw insights based on findings, which can form the basis of marketing decisions.
Marketing Mix Modelling Solution – Compass
Acuvate’s AI-Powered Marketing Mix Modelling Solution – Compass, ticks all these boxes and more. It leverages advanced analytics to help you unlock the value of your data, and achieve more effective campaigns and promotions. Compass is created with the sole objective of maximising your ROI and increasing sales based on optimally minimum spend on marketing, advertising and trade promotion.
The Compass solution by Acuvate works by integrating data from multiple internal and external sources. This is then utilised by harnessing advanced analytics like predictive and prescriptive analytics, which are powered with Artificial Intelligence and Machine Learning and add the “intelligence” element to the software.
Your internal data includes – all sales information like primary, secondary and point of sales; all market research and all data on past promotions and campaigns. While the external data may include but may not be limited to, factors such as – Competitor Information, weather, social media, key events, search analytics, among others. Based on analysis of the data, the Compass solution draws actionable insights and predicts sales for every marketing recommendation. This really helps managers make informed business decisions.
In terms of usability, the AI-powered Compass tool helps users and marketers:
- Measure campaign effectiveness by showing the sales uplift and ROI generated by each campaign
- Recommends the right type of marketing campaign to be run for the right product at the right time and location
- Get real-time alerts and insights of marketing KPIs for ongoing campaigns.
- Perform What-If Scenario analysis and forecast sales
- Analyse market performance of competitor’s products
- Create insightful data visualisations
- Identify sales opportunities
- Stay updated on key performance indicators of all products
- Manage product portfolio.
If you’re interested to watch Compass in action and learn more about its capabilities, feel free to get in touch with our experts and schedule a free demo!