Facebook Twitter Instagram
    Trending
    • How ChatGPT has taken the Tech World by Storm
    • What is a CDP & how to Create a Solution with Salesforce
    • What is Salesforce CDP and its main Features ?
    • How to Create 360 Customer View with Identity Resolution
    • What makes Timberland, Birkenstock and Crocs so popular?
    • What is the Importance of Lithium-Ion Battery
    • Customer Churn Explained with Telecom Case Studies
    • How to Increase Customer Retention, Loyalty & Satisfaction
    Facebook Twitter LinkedIn Pinterest RSS
    Retail MarTech AI – Learning Videos & Stories
    Leaderboard Ad
    • Home
      • About Us – Aggregators & Classifiers
      • Editor’s Picks
      • Topics
        • Engineering
        • Retire Early
        • Economy
          • World Economy
          • Demand and Supply
          • GDP
          • Inflation
          • Recession
          • Commodity
          • Globalization
        • Sustainable Living
        • Airlines
        • Water
        • Agriculture
        • Railway
        • Automotive
        • Media
        • Trends
          • Top Industry Trends
          • Top Trends in Media
          • Top Technology Trends
          • Emerging Fields
        • Visa
          • Immigration
          • USA
          • H1B Visa
          • Canada
          • Austria
          • Estonia
          • India
          • Singapore
      • Contact
      • Jobs
      • Internship
      • Write for Us
    • Learn
      • Languages
        • Learn German
          • German Dialogue
          • Day to Day German
          • Email Writing
          • German Stories
          • German Grammar
          • German Nouns
          • Cases and Articles
          • German Tenses
          • German Verbs
          • German Adjectives
          • German Pronouns
        • Learn French
      • How To Create
        • WordPress Website
        • Online Payment Link
        • Online Teaching Videos
      • Learn Programming
        • Mobile App Development
          • Flutter
          • MongoDB
        • Web Development
        • Full Stack Development
      • Data Science Online
        • Statistics Online
        • Python
        • R Programming
        • SAS
        • Marketing Analytics
        • Big Data Online
          • Hadoop
          • MapReduce
          • Apache Pig
          • Apache Hive
          • Apache Spark
      • Work Life Balance
      • How it is Made
      • How Things Work
      • DIY (Do It Yourself)
      • IQ Test
    • Retail
      • History of Retailers
      • Success Stories
      • Failure Stories
      • Retailers
        • Supermarkets
        • Grocery Stores
        • Brick and Mortar
      • Retail Technology
        • AI Retail
        • IOT Retail
        • AR Retail
        • Big Data Retail
        • Blockchain Retail
      • Retail Marketing
        • Retail Marketing Strategy Guides
        • In-Store Marketing
        • Out of Store Marketing
        • Digital Marketing
      • Retail Management
        • Store Design
        • Top Retail Ads
      • Omnichannel Retail
      • Supply Chain
        • Supply Chain Guides
        • Warehouse
        • Procurement
        • Logistics
        • Manufacturing
        • Supply Chain Crisis
      • Retail Shipping
      • E-Commerce
      • Shopping
      • Fashion
    • Marketing
      • Brand
      • Pricing
        • Pricing Strategy
        • Pricing Analytics
        • Price Optimization
        • Price Elasticity
      • Marketing Mix
      • Customer
        • Customer Service
        • Customer Experience
        • Customer Lifetime Value
        • Customer Acquisition
        • Customer Retention
        • Customer Journey
        • Customer Engagement
      • Marketing Technology
        • Digital Transformation
        • Digital Marketing
          • Website Marketing
          • Email Marketing
          • SMS Marketing
          • Social Media Marketing
          • Search Engine Optimization
        • Customer Tools
        • Digital Attribution
      • Advertising
      • Promotion
      • Marketing Strategy
      • Mobile Marketing
      • Neuromarketing
    • Technology
      • Internet
      • Information Technology
      • Customer Data Platform
      • Artificial Intelligence
        • ChatGPT
        • Robotics
        • Internet of Things (IOT)
        • Self Driving Cars
      • Blockchain
        • Web3
        • Crypto
        • Metaverse
        • Dapps
        • Blockchain Guides
      • Analytics
      • Big Data
      • Tech Videos
      • Tech Failures
      • 3D Printing
        • 3DP Guides
        • 3DP Slicer
        • 3DP Tuning
        • 3DP Processes
        • 3DP Applications
      • Battery
      • Smart Cities
        • Green Places
        • Smart Grid
        • Smart Energy
        • Smart Mobility
        • Smart Home
      • Databases
      • Operating Systems
    • Education
      • Schools and Universities
      • Aptitude Tests
        • Learning Guides
        • Mensa IQ Tests
        • Abstract Reasoning
        • Logical Reasoning
        • Diagrammatic Reasoning
        • Spatial Reasoning
        • Raven’s Progressive Matrices
        • Puzzles
      • Kids Learning
      • Free Online Learning
      • Exams and Tests
        • TOEFL
        • SAT
        • LSAT
        • GMAT
        • CAT
      • Interview Questions
      • Education Technology
    • Business
      • Learning Videos
      • So Expensive
      • Do What You Love
      • Startups
        • Idea Pitch
        • Startup Fund Raising
        • Startup Success Stories
      • Entrepreneurship
      • Innovation
      • Rags to Riches Stories
      • Success Stories
      • Venture Capital
      • Organization
        • Outsourcing
        • Management
        • Organizational Behavior
        • Human Resources
      • Leaders’ Talks
      • Silicon Valley
      • Business Model
    • Failure Stories
      • Startup Failure Stories
      • Business Failure Stories
      • Strategy Failure Stories
      • Marketing Failure Stories
      • Product Failure Stories
      • Rise and Fall Stories
    • Energy
      • Energy Crisis
      • Recycling
      • Waste
      • Renewable
      • Solar Power
      • Solar Vehicles
      • Wind Power
      • Wind Turbine
      • Electric Power
      • Electric Vehicles
      • HydroPower
    Retail MarTech AI – Learning Videos & Stories
    You are at:Home»Learn»Data Science Online»Marketing Analytics»Which are the best Marketing Mix Modeling Variables?
    Marketing Mix Modeling Variables
    Marketing Mix Modeling Sales Decomposition

    Which are the best Marketing Mix Modeling Variables?

    0
    By AM on April 13, 2022 Marketing Analytics, Marketing Mix

    What is Marketing Mix Modeling ?

    The mathematical framework to estimate direct and indirect effects of Marketing is called Marketing Mix Modeling. Often this framework is the Mathematical or Econometric Model for entire Ecosystem that includes 4 Ps of Marketing. 4Ps of marketing include Price, Place (Distribution), Promotion, Product. Seasonality and/or other macro economic indicators also directly or indirectly influence the Volume Sales.

    What are the Key Elements of Marketing Mix- Price, Place (Distribution), Product and Promotion
    Key Elements of Marketing Mix

    To correctly model or estimate marketing mix, it requires a lot of key variables in the mathematical model. Dependent Variable is often Volume Sales or Market Share. Below are the Best Variables to build a Sales Response Model

    Marketing Mix Modeling Variables

    A robust marketing mix model or strategy that stands the test of time, involves a set of key actions. Those Actions or Variables are (and not limited to)

    • Marketing activities
    • Product Launches and Events
    • Advertising – Mass Media (TV, Print, Radio, OOH etc)
    • Promotions
    • Distribution
    • Product Pricing
    • Cannibalisation due to multiple Product of the same Brand
    • Digital Advertising- Search, Display, Video, Social Media
    • Digital Campaigns

    Base sales are Sales without any marketing activities and mainly driven by the Brand Equity.

    Baseline Variables

    Baseline Sales are achieved without any advertising. Brand Equity is a major contributor to the baseline . Baseline Variables are generally influenced by economic or environmental changes and remain generally stable.

    • Base Sales: Weekly Volume Sales figures of the Product
    • Base Price: Weekly Price of the product in the Market.
    • Distribution: No. of stores/locations the product is available. It is of two types Numeric Distribution and Weighted Distribution. Distribution is one of the biggest contributors to baseline sales.
    • Inventory orAssortment/SKUs: Number of SKUs in a store at weekly level (optional variable)
    • Velocity: Rate at which product moves off the shelf in a store (optional variable)
    • Seasonality Index: Dummy Variable to capture Spike/Dip in Sales

    Promotions

    • Temporary Price Reductions/Discounts: Sales that result from Reduction on Price of the Product
    • Coupons/Offers (buy 1 get 1, buy 2, x% off): Sales that result from Coupons or Offers on Products on Shelf/Display
    • Average Discount: Average Price Discount in a time period. Generally its weekly (Since Sales are weekly, so its better to capture it Weekly)
    • Weighted Pricing Promotion: Average Price Discount on Products weighted based on their contribution to the weekly Sales.

    Traditional Media and Digital Advertising Variables

    Reach is defined as number of people exposed to the Ad. Frequency is defined as the Number of times Ad was run.

    • TV GRP : Reach of the Ad * Frequency of the Ad (Number of Consumers reached by the ad)
    • RADIO: Expenses on Radio or Reach of the Radio Ad (if such a metric is available, generally expenses are given). Modeling expenses is not the ideal way to capture such variables.
    • OOH (Out of Home) : Expenses of the OOH Ad. Modeling expenses is not the ideal way to capture such variables. If there is a way that OOH impressions can be captured through Sensor or IOT technology, that would be better.
    • PRINT : Weekly Expenses on Print Medium (Newspapers/Magazines etc.) or Circulation of the Editorial/Newspaper Frequency (Number of Consumers reached)
    • SEARCH Impressions : Number of people reached/exposed to Search Ad
    • DISPLAY Impressions : Number of people reached/exposed to Display Ad
    • VIDEO/WebTV Impressions : Number of people reached/exposed to the Online Video Ads
    • SOCIAL MEDIA Impressions : Number of people reached by Social Media Ad.
    • SEARCH CTR (Click Through Rate) : Number of people who clicked on Search Ad
    • DISPLAY CTR : Number of people who clicked on Display Ad
    • VIDEO/WebTV CTR : Number of people who clicked on Video Ad
    • SOCIAL MEDIA CTR : Number of people who clicked on Social Media Ad
    • DIGITAL CAMPAIGN Impressions : Number of people who were exposed to the Online Campaign.
    • DIGITAL CAMPAIGN CTR : Number of people who clicked on Online Campaign.

    We can capture other digital variables as well like Video Completion Rate, Likes or others etc. But it is highly likely that they will be highly correlated which can introduce bias in the model. So either use one of them or combine them as a weighted average based on their affinity to Sales.

    Competition Variables (all at Weekly level)

    • Competition Media/Advertising Variables (if available)
    • Promo Pricing Variables of the Competing Brands
    • Distribution or Distribution Gains of the Competition

    Other Variables (all at Weekly level)

    • Category Growth (weekly)
    • Product Launch/Big Events and Conferences- Expenses or Audience/Consumers reached
    • Specific Product Promotions or Product Sampling- Sales Spike coming from specific Product Promotion or Free Sampling
    • Sponsorships during Sporting or Cultural Events- Expenses or Audience Reached
    • Trend Variables- Promo, Pricing or Distribution Trend in a Given Time Frame (either weekly, monthly, quarterly)
    • Any other macroeconomic KPIs Available at a weekly level

    Learn More

    • Ecommerce
    • Marketing Mix
    • Business Learning Videos
    • Retail Failure Stories
    • Startup Failure Stories
    • Travel Food Culture
    • Retail Articles
    • About Us
    • Contact Us
    Baseline Sales Marketing Mix Modeling Marketing Mix Modeling Variables Media Mix Modeling Promotions Sales Decompositon
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    AM
    • Website

    AM, The Founder and CEO of RetailMarketingTechnology.com is an Entrepreneur & Business Management Professional with 17+ Years Experience and Expertise in many industries such as Retail, Brand, Marketing, Technology, Analytics, AI and Data Science. The Industry Experience spans across Retail, FMCG, CPG, Media and Entertainment, Banking and Financial Services, Media & Entertainment, Telecom, Technology, Big Data, AI, E-commerce, Food & Beverages, Hospitality, Travel & Tourism, Education, Outsourcing & Consulting. Currently based in Austria and India

    Related Posts

    The Ultimate Video Guide on Pricing Strategies We See Everyday

    The Ultimate Hands On Guide on Price Optimization with Excel Solver

    Marketing Mix Modeling with R and Excel Video Guide

    Comments are closed.

    Latest Posts
    February 19, 2023

    How ChatGPT has taken the Tech World by Storm

    February 16, 2023

    What is a CDP & how to Create a Solution with Salesforce

    February 16, 2023

    What is Salesforce CDP and its main Features ?

    February 16, 2023

    How to Create 360 Customer View with Identity Resolution

    FIRE Stories
    Retire Early
    November 21, 20220 Retire Early

    The FIRE Story of a Traveller Who Settled in Mexico

    Updated:November 21, 20221 Min Read

    Learn How Roshida Retired at 39 after Traveling the World for about 6 months, and realising that she didn’t want to go back to work. With Financial Independence, she Retired Early & Settled in Mexico.

    November 21, 2022

    The FIRE Story of a Couple who Saw a Health Crisis

    November 17, 2022

    The Quit 9-5 FIRE Story of a Colorado Couple

    October 28, 2022

    The Ultimate FIRE Story of a Frugal Software Engineer

    October 14, 2022

    The Ultimate FIRE Story of an Internet Entrepreneur

    New Comments
      Copyright © 2023 ReMTech.
      • Home
      • Retail
      • Marketing
      • Technology
      • Education
      • Business

      Type above and press Enter to search. Press Esc to cancel.