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Applying Predictive Analytics to Marketing Mix and ROI

Dongyang Li
Posted 4/21/15
1 Comment

Retail, CPG and financial services industries have gradually started to embrace new technologies for marketing mix analysis.  Many organizations in various industries are turning to predictive analytics to gain an edge. Unlike traditional reporting solutions, which offer only a view of past activities, predictive analytics provides the ability to look ahead by discovering patterns and trends in historical sales and marketing data to determine how potential and existing customers are likely to behave in the future. Yet, many companies' resist technology-driven predictive marketing mix and ROI optimization analysis because they believe that gut feel is stronger than actual data based science.  Using your gut feel to advertise and market products is just not the best way to do it anymore!  Competitors that are embracing predictive analytics are gaining market share and competitive advantages because they are understanding what their customers need?  We make our clients more successful and better able to navigate and optimize their spending even in the face of fierce competition.  By accepting, adapting and applying predictive analytics to your Marketing Mix Analytics (MMA), Dunn Solutions Group helps make the application of predictive analytics easier and more profitable without your need to have data scientists and tons of expert's on-hand.

WHAT:

What is predictive analytics and what is marketing mix analytics?

Predictive analytics is the final goal of data mining that examines the internal and external data to identify future risks and opportunities.  While marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market.   We call the application of predictive analytics to marketing mix analytics predictive marketing mix analytics.

WHY:

Why should I think about adopting predictive marketing mix and ROI optimizations and analytics?

Traditional marketing mix data analysis is clunky. It tends to be historic and not predictive, and is marginally useful for decision making.  Data is usually dumped into spreadsheets without any sophisticated diagnostic tools.  As more communication channels emerge, more data is generated – both structured and unstructured.  One of the biggest problems is that the data from new channels isn't being properly gathered and used:  In terms of time, the issue is most traditional marketing mix analytics use secondary data that's based on the last six or nine months, which is obviously not real time; while in terms of volume, with manual or traditional reporting methods, it becomes more difficult to uncover the most important nuggets of customer insight hidden in massive amounts of data. It's urgent that the intelligence contained in the data be collected through omni-channel marketing efforts to drive more successful omni-channel initiatives in the future.

Predictive analytics enhances and changes all that.  Our predictive analytics modeling system integrates a wide-range of data with an ample amount of visualizations and scenarios to help you make the right business decisions.  We have the ability to build models from data already in your data warehouse and organized or from new disparate data sources.  It does this quickly and strategically by incorporating them into the strategic marketing mix models.

In addition, our predictive analytic tools help you to mine omni-channel marketing data, and financial data no matter how much data you have or need to have explored, and whether it's in a structured or unstructured format.  Determine where your customers are, what they need or want, how they behave, and most importantly, what will compel them to make a purchase and keep coming back for more.

This allows you to refine your messages and segmentation targeting to drive personalization across channels in a way never before possible.

HOW:

How does implementing a predictive analytics marketing mix and ROI Optimization help?

Predictive Analytics and Marketing Mix Modeling helps to:

  • Drive an average 40% improvements in marketing campaign effectiveness
  • Optimize future marketing investments
  • Balance short-term marketing and promotion tactics with long-term brand building needs
  • Understand ROI for each off-line and online media channel, campaign and execution (i.e., search vs. circular vs. TV)
  • Optimize allocation of traditional media vs. digital media and determine the synergies between the two with marketing modeling
  • Quantify the value and impact of emerging/new digital media (Facebook, Groupon, Foursquare, mobile aps, etc.)
  • Lock into the right mix of marketing investment by DMA, region, country and "go to market" channel
  • Determine which media vehicles and campaigns are most effective at driving revenue, profits, share and consumer segments
  • Understand the economic, competitive, seasonal, weather and operational factors impact on sales by key time period
  • Quantify the ROI of improving marketing effectiveness in terms of sales, profits, share and target consumer growth

How Does Dunn Solutions Group deliver on our promises and capabilities in Marketing Mix Optimizations and Predictive Analytics?

We conduct a consultative discovery of value propositions:

  • Problem Identification
  • Organizational Objective Alignment
  • Issues to be solved with Marketing Mix
  • Provides Strategic Learnings
  • Develops a Roadmap to Success

 

We develop and use Predictive Models to:

  • Develop custom models with client-specific data to understand the What, When, Where and Why based on optimized, simulated marketing and media programs
  • Review the historical "Due To's" to determine why and how much each marketing, media, promotion, distribution, operational, competitive effects, economic and other had on the business and the ROI of each element

 

We build custom marketing data management platforms to:

  • Collect, cleanse and integrate data into a superfast in-memory database
  • Develop machine learning models, simulations, optimized ROI analysis
  • Build additional insightful business reports & dashboards
  • Custom monitoring to address specific problem areas

 

We provide continuous, actionable insights:

  • Monitoring of marketing performance
  • Optimized marketing and trade promotion performance
  • Pricing actions
  • Economic indicators
  • Customer attitudinal insights
  • Competitive landscapes and other business conditions

 

How have others benefited from Marketing Mix and ROI optimization?

CASE STUDY

Top Beer Manufacturer

Challenge:

  • Very large marketing and media buying budget and not optimized
  • Many ads specific to top-selling brands
  • Increased competition from craft brews with over 10,000 varieties with over 1,000 new flavors entering the market in one year
  • Falling sales in #1 product due to new lower calorie alternatives
  • New product performance hard to measure
  • Discounts and trade measurement issues especially display by locations
  • Category and product management had become a nightmare

Solutions:

  • Developed Category Management and Business Planning Simulation Tool
  • Evaluated Competitive Framework and Display by Location Analytics
  • Developed Forecasting Simulation Tool to predict product performance
  • Developed Marketing Mix and Market Potential

Results:

  • Identified major gaps and new product potentials
  • Reallocation of marketing budget to better support what is driving volume resulting in 4% increase in key brand sales and 40% improvement in marketing efficiency

 

CASE STUDY

Top Soft Drink Manufacturer

Challenge:

  • Increased competition from larger soft drink manufacturer top brand had fallen from #2 to #4 in the CSD category
  • Assortment Issues
  • Customer taste changes and search for healthier alternatives
  • Belief that they were over-spending on advertising
  • No sense of value vs. cost of social media advertising
  • Digital technology was disrupting every business at every point in the value chain
  • Rising costs of ingredients driving up base prices
  • Manufacturer had no understanding of operations and sales impacts based on store types, economy and weather
  • Extreme weather patterns are expected to persist, forcing companies to deal with commodity scarcity and volatility

Solutions:

  • Developed Category Management and Business Planning Simulation Tool for four different divisions for CSD, OJ, Tea and Water, and Coffee
  • Implemented Forecasting Simulation Tool to predict product performance
  • Developed Marketing Mix with ROI and Market Development Potential
  • Developed product and advertising saturation curves
  • Developed key indicators to evaluate our business results and financial condition
  • Evaluated Competitive Framework and Display by Location Analytics

Results:

  • Returned top product to #2 in the industry and made adjustments to Non-Carbonated Soft Drinks that have launched a bigger share of the market
  • Embraced more digital technology at every point in the value chain
  • Better ability to manage category and keep up with major changes in customer preferences $200MM in global efficiency gains
  • Category management tool provided ability to better communicate with distributors and retailers about TPR and Displays increasing sales by 2% in key displays $60MM sales increase
  • Ability to evaluate weather patterns and their impact on sales volume to help better prepare for major weather events and avoid stock outs
  • Key indicators helped management and senior management better evaluate business results and financial condition to make changes faster

 

CASE STUDY

Fortune 100 Insurance Company

Challenge:

  • A subsidiary of a Fortune 100 insurance company provides health insurance services in 29 states and was facing specific new competition
  • Products were underpriced for claims experience
  • Larger competitors were quickly gaining market share

Solutions:

  • Performed Segmentation of Customers
  • Developed Forecasting Simulation Tool to predict product performance
  • Developed Marketing Mix and Market Potential
  • Market based assessments to better target customers

Results:

  • Transformed the subsidiary into the fastest growing individual health insurance company in the nation at a time when most in the industry were shrinking 
  • Doubled the portfolio with targeted high-value customers in just 18 months to over 350,000 customers and $500 million in new annual revenue

 

WHEN:

We should your company embrace predictive analytics to marketing mix analytics?

We can work with your data in any form or state and make it fit with the modeling methods which means that you can embrace it now.

 

WHO:

Who can help you?

Dunn Solutions has been helping companies leverage their data for over twenty five years. Our Predictive Analytics and Business Intelligence Teams help companies make the most of their existing data to uncover future trends, risks & opportunities that result in bigger returns, or avoid big losses.

Please also refer to our webinar https://youtu.be/bw992U0VlMQ for more information!  Feel free to contact our director of sales Jeff Goffinets (jgoffinet@dunnsolutions.com, (847) 673-0900 x104) at Dunn Solutions Group to take advantage of our expertises!

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Warwick uk
I read your Blog Thanks For A great information about Predictive Analytic Marketing.We have Provide the same services.https://goo.gl/UHw09Y
Posted on 3/14/17 5:31 AM.

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