MARKETING PRODUCTIVITY ANALYSIS
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Transcript of MARKETING PRODUCTIVITY ANALYSIS
MARKETING PRODUCTIVITY ANALYSIS
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“Half the money I spend on advertising is
wasted; the trouble is I don't know which half.”
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John Wanamaker (1838-1922):“Half the money I spend
on advertising is wasted; the trouble is I don't know which half.”
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“Corporate marketing is the last bastion of
unaccountable spending in corporate America.”
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Eric Schmidt (2006):“Corporate marketing is
the last bastion of unaccountable spending in corporate America.”
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Marketing Productivity Analysis“The use of productivity measurement in relation to the marketing function is relatively new. The central role of marketing can be expressed as the management of consumer demand and the translation of this demand into sales and profits. Marketing productivity analysis is an important tool in evaluating the performance of the marketing department in carrying out this role. It measures the efficiency with which marketing inputs are used to generate target levels of marketing outputs.”
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Marketing Productivity Analysis“The use of productivity measurement in relation to the marketing function is relatively new. The central role of marketing can be expressed as the management of consumer demand and the translation of this demand into sales and profits. Marketing productivity analysis is an important tool in evaluating the performance of the marketing department in carrying out this role. It measures the efficiency with which marketing inputs are used to generate target levels of marketing outputs.”
Thomas, Michael J. (1984) “The Meaning of Marketing Productivity Analysis”
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Effective vs. Efficient: The Difference?
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Effective vs. Efficient: The Difference?Effective (adj.): Adequate to accomplish a purpose; producing the intended or expected result.
Efficient (adj.): Performing or functioning in the best possible manner with the least waste of time and effort.
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“Measuring Marketing Productivity”
Rust et al. (2004)
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“Metrics for Making Marketing Matter”
Lehmann (2004)
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Framework for Marketing Performance Measurement
Adapted from Lehmann and Reibstein (2006)
What marketers and competitors do • Advertising• Price• Promotions• Distribution
What customers think & feel
Awareness Consideration
Liking
What customers do
Brand purchases
Direct Effect Feedback Effect
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Advertising Campaign Testing
Adapted from Lehmann and Reibstein (2006)
What marketers and competitors do • Advertising• Price• Promotions• Distribution
What customers think & feel
Awareness Consideration
Liking
What customers do
Brand purchases
Direct Effect Feedback Effect
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Brand Health Tracking
Adapted from Lehmann and Reibstein (2006)
What marketers and competitors do • Advertising• Price• Promotions• Distribution
What customers think & feel
Awareness Consideration
Liking
What customers do
Brand purchases
Direct Effect Feedback Effect
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Marketing Mix Modeling
Adapted from Lehmann and Reibstein (2006)
What marketers and competitors do • Advertising• Price• Promotions• Distribution
What customers think & feel
Awareness Consideration
Liking
What customers do
Brand purchases
Direct Effect Feedback Effect
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M5: Mindset Metrics and Marketing Mix Modeling
Adapted from Lehmann and Reibstein (2006)
What marketers and competitors do • Advertising• Price• Promotions• Distribution
What customers think & feel
Awareness Consideration
Liking
What customers do
Brand purchases
Direct Effect Feedback Effect
Return on Marketing Investment: Rearview Mirror
Marketing ROI
Marketing Expenditure
Marketing Support
IncrementalContribution
IncrementalVolume
Costs Margins
Model
Return on Marketing Investment: Front Dash
Marginal Marketing ROI
Marginal Expenditure
Marketing Support
MarginalContribution
IncrementalVolume
Costs Margins
Model
A BRIEF HISTORY OF MARKETING MIX MODELING
It all began with…
What do these three things have in common? (first
drink is on me if you can guess!)
The Answer:
SIR FRANCIS GALTONanthropologist, eugenicist, tropical
explorer, geographer, inventor, meteorologist, proto-geneticist, psychometrician and statistician
1875: Is This Really Marketing Mix?
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Galton’s work on inherited characteristics of sweet peas led to the initial conceptualization of linear regression
The First 100 Years
1875
Regression
conceptualized
The Birth of Data
1875
Regression
conceptualized
1923
A.C. Nielsen
Company Founded
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The Nielsen FactorPioneer in Data Collection
• Inaugurated a National Radio Index for broadcasters and advertisers in 1942• Followed by a television ratings
service in 1950• Once TV ratings were available,
people starting experimenting
Advertising, Goodwill and Demand
1875
Regression
conceptualized
1923
A.C. Nielsen
Company Founded
1957 1962
Vidale/Wolfe observe
relationship between sales
and advertising
Arrow/Nerlove
Formalize Adstock
Dorfman/
Steiner
Theroem
First Marketing Mix Model
1875
Regression
conceptualized
1923
A.C. Nielsen
Company Founded
1957 1962
Arrow/Nerlove
Formalize Adstock
1975
Little/Lodish Media
Planning Calculus
MDS Founded (1969)
Little BRAND
AID Marketing Mix Model
Dorfman/
Steiner
Theroem
Vidale/Wolfe observe
relationship between sales
and advertising
Advertising has a Carryover Effect
1875
Regression
conceptualized
1923
A.C. Nielsen
Company Founded
1957 1962 1975 1979
Little BRAND
AID Marketing Mix Model
Broadbent
Popularizes
Adtsock
Arrow/Nerlove
Formalize Adstock
Little/Lodish Media
Planning Calculus
MDS Founded (1969)
Dorfman/
Steiner
Theroem
Vidale/Wolfe observe
relationship between sales
and advertising
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Two Dimensions of Adstock
Advertising Lag (Decayed Effect)
Advertising Saturation (Diminishing Returns Effect)
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Ten Years After
1980
IRI Founded
Nielsen Launches
Home Video Index
Guadagni/Little Logit Mix Model
1983 1985 1986 1987 1989
IRI Acquir
es MDS
Duke’s Marketin
g Workben
ch
IRI’s Infosca
n Introduced
MMA Found
ed
Blattberg/Wisniewski
How Promotions
Work
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Marketing Mix Models – Before the Internet
TV x Print Radio
Trade
Sales
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The Next 10 Years
1990 1999
10 Marketing Mix Modeling firms
founded; numerous consultants and ad agencies start ROMI
practices
So what happened next?
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The World Changed…
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MMM in a Digital World
Business ImpactDirect
Business Performance
Sales & Trade Promotions
Business Impact
Marketing
Paid SearchImpressions
Online Display
Paid SearchClicks
Social MediaSearch VolumeSearch Volume
Indirect
Business ImpactSales