As a marketer of durable goods, your likely mission is to build brand image, optimize your media budget and ultimately to generate profit. While that might sound like “mission impossible”, the good news is that there is a tested research technique that can help. Marketing mix modeling offers a way for marketers to successfully overcome the mounting challenges they face. In this blog, we explore four reasons why marketing mix modeling is as relevant to manufacturers of durable goods as it is to the consumer goods industry. In doing so, we will help you navigate from “mission impossible” to “mission accomplished”.
Put simply, in the digital age, there are more media channels and more connected devices. Consequently, Connected Consumers are exposed to more advertising messages than ever before. This media fragmentation makes it difficult for manufacturers to know where, when and how to reach consumers. In addition, the immediacy of the digital channel has placed more pressure on marketing campaigns to deliver short-term sales. Add to this the proven decline in consumers’ average attention span, and you have a challenge that even the Impossible Missions Force’s Ethan Hunt might be happy to see self-destruct in five seconds.
The success of any campaign depends on getting your media mix right. In order to maximize your budget, it is essential to have accurate insights on how your ads are performing at any given moment. What you need to understand is which campaigns on which media platforms positively impact sales of your product. Marketing mix modeling evaluates the contribution of the different media channels – both online and offline – enabling you to allocate your budget so that it delivers maximum ROI.
In the technical consumer goods (TCG) sector, e-commerce is an extremely important channel, and its share of sales is growing annually. According to our Point of Sales (POS) Tracking data, online accounted for 23.1% of overall sales in 2016 (see infographic). Shoppers have adopted an omnichannel approach to shopping in the TCG sector. The message couldn’t be clearer: if your products aren’t available across all channels, you are losing sales.
Omnichannel shopping is becoming the norm across many categories
Online has also given consumers the power to check prices and compare products. This, in turn, has amplified the importance of both the manufacturer’s and retailer’s promotional activities.
Marketing mix modeling enables you to understand exactly which of your promotions work, providing you with the intelligence you need to support your marketing decisions. Measuring the effectiveness of your executions gives you the power to fully optimize your activity for each channel.
When technology is new, success can be built on product features. However, as tech markets mature, all brands and models become very similar. In this type of market, it becomes virtually impossible to stand out for having a “great product”. Commoditization is rife, and manufacturers and retailers must find new ways to differentiate themselves from their competitors.
Today’s Connected Consumers will only engage with, relate to and buy your product when they’ve had a brand experience. And they’ll only return to your brand if their experience of it was memorable. Consequently, we’re seeing the trend for marketing campaigns that focus more on product benefits and less on features spread across the globe. It is becoming more common for technology manufacturers to focus on a compelling brand experience in their advertising.
A clear communications campaign is required if you are to succeed in conveying your product and brand values, and provide a memorable experience as well. Marketing mix modeling measures the sales impact of these campaigns and the media used to distribute them. It identifies the ROI for each channel and evaluates cross-media and cross-channel synergies.
In consumer tech, the product life cycle is getting faster while the re-purchase ability slows down. At the same time, for almost all brands, advertising campaigns tend to be short-lived and focused specifically on new product launches. Ultimately, this means there is less time to deliver a margin.
When planning your next advertising campaign, you may need to choose between investing in an intensive short-term but high-impact, high-cost TV spot versus a longer-term digital execution delivered via social networks. The commercial success or failure of your campaign may rest on this decision. This is where marketing mix modeling can provide directional insight. By providing weekly sales contributions for the different elements of your campaign, it can help you identify the most appropriate media plan to drive sales at the crucial moment. At the same time, it can also support your brand’s growth in the longer term.
We’ve addressed four of the key challenges faced by TCG marketers and manufacturers. Marketing mix modeling can help you understand how your above- and below-the-line marketing activities are driving your sales. We believe it is the way to accomplish your mission in today’s highly competitive global marketplace.
Bjoern Kroog is Global Director of GfK POS Analytics. To share your thoughts, please email firstname.lastname@example.org or leave a comment below.
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