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Math Marketing

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In times like these, when grabbing consumer attention is becoming increasingly difficult, persuading customers and making her buy a product through advertisement is like becoming a star in bollywood. It’s not easy unless you are a star son, and it’s not easy unless your product is son of a big brand.

Even if your product is son of a big brand, stardom doesn’t come easy. It requires marketing, it requires investment, it requires money. Now when there is investment, most certainly there would be talk of ROI.

To have a picture of gigantic money thrown in for advertisement. Have a look at 2008 estimate and trend of advertisement expenditure by ZenithOptomedia. The chart is taken from Indiantelevision.com

Ad_spend

Here it would be better to keep one economic concept in mind, that marketing/advertisement is necessary or more important  for products that are not innately different from competitor’s products. Through advertisement, organisation wants to create product differentiation in mind of consumers. Thus  advertisement budget/ total budget  for CPG industries would be considerably high compared to IT company, say, Infosys.

Now, if you observe the chart above, or rather think about the channels of advertisement on your own. You will jot down, TV, Newspaper, Online Media, Magazine, Radio, Cinema. Yes, cinema also. It’s not just what we see before the beginning of a movie in theatres. Advertisement is there in the content of a movie also. It was advertisement that Rekha as Rithik’s grandma in krish uses Tide for washing. Recently, I observed a very prominent hoarding of Cinthol in an old Amitabh’s movie, Akela. The way the hoarding is shown, I am certain it’s not by chance. So advertisement through content manipulation goes back to seventies, even in bollywood.

Coming back to what we have been discussing, let’s suppose you are launching a product  X in market. The budget that you have for marketing is Rs. 10 crores. The question that confronts you now is that how are you going to allocate your budget among different mediums. After all medium is message.

The answer lies in market mix optimization/ market mix modelling. The title of this post is “Math Marketing” because it’s not through intuition that marketeers today decide the budget allocation, but it’s through boring statistical analysis/modelling.  Maths will help you determine the sales driver, maths will help you determine ( later on justify your decision) that with unit increase in marketing expenditure in TV what is unit increse in sales volume for your product.

The process of market mix modelling:


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Written by SK

September 2, 2009 at 6:31 pm

Posted in 1

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