Jan 4

Written by: IRI Blog
1/4/2010 4:44 PM

Marketing Mix Modeling (MMM) is a powerful approach for gaining insights that can directly lead to improved marketing ROI. MMM originated in the CPG industry but has been incorporated into financial services, telecommunications, retail, entertainment, and other industries.

MMM is essentially a statistical analysis that links multiple variables, including marketing, sales and promotional activities, and external factors, to changes in consumer behavior. The data derived from MMM can then support the development of forward-looking business simulations and optimization exercises.

MMM benefits companies in the following ways:

• Provides backward visibility into the ROI for marketing tactics – this is important for the marketing spend accountability that c-level executives demand.
• Helps diagnose the reason for changes in business performance over time – this can provide high-level views of the brand down to granular viewing of customer segments, channels, attitude changes, and more.
• Forecasts future trends and predicts results of any changes made to the marketing mix as a part of response planning – this enables marketers to optimize spending across the media mix for a product or service.

Organizations have realized up to 40 percent improvements in marketing ROI within 12 months by adopting MMM disciplines; however, like with most marketing efforts, success requires careful planning and attention to detail. There are 10 keys to a successful MMM program and the details can be found in my Point of View report, “Success and Failures in Marketing Mix Modeling: Maximizing the Potential of Today’s Predictive Analytics.”

If managed well, MMM can provide significant competitive advantage to companies across almost every industry, offering new, predictive insights that can directly result in revenue and profit increases.

I am eager to hear your experiences with your current MMM practices. What are you currently doing and how do you plan to expand MMM throughout your organization?  What successes and challenges have you faced so far? Please share your experiences, thoughts and opinions.

Best wishes for 2010 and beyond,
Doug Brooks
SVP, Analytics and Modeling Services

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