CASE STUDY
Marketing Mix Modeling Shows Pharma Leader How to Win 5% Sales Growth with Smarter Spending
Determining effective media spends helps seal up leaky buckets and provide a clear vision for budget reallocation.
Our client, an American multi-national health technology and medical device leader with a presence in 160+ countries, was concerned about their slowing growth. They needed to examine their media mix, identify any leaky buckets, and allocate investments to more productive areas.
To help them uncover the truth behind their situation, we created a national and regional-level market mix modeling simulator and recommendation engine to help them improve their media, trade, and promotional activities.
Pinpointed Recommendations Drive Projected Sales Increase
We developed 5 market mix models (one at the national level and four at regional levels) to help our clients understand and plan their media investments. This allowed them to:
- Estimate various media and promotional drivers’ impact on sales and ROI.
- Determine the elasticity of price, distribution, and promotional activities.
- Perform deep dives into critical areas like media, trade, ethics, promotions, etc.
Our models used the information gleaned from deep dives to develop specific, actionable recommendations, such as discovering the optimal range of TV GRPs to improve TV ROI in each region.
Marketing Spend Effectiveness Framework Analyzes Potential Actions
We developed a mixed effect linear regression model for the national level recommendations, plus the four regional media mix models mentioned above. Then, ROIs and elasticities from the model as well as projected spends were fed into the simulator. This allowed the client to visualize multiple budget allocation scenarios; we used inference from a particular scenario to identify the best scenario, which was then broken down into recommended actions.
Among the insights discovered in this project, the model recognized that competitors’ media activity played a significant role in their success against our client. It then analyzed TV campaigns conducted over three years and determined that shorter edits (25 seconds or less) not only delivered the bulk of the client’s messaging, they also were consistently more effective than longer edits.
When this was fed into the simulator, it recommended specific actions that would increase volume sales by 1.4 percent.
Proceed with Clarity
Thanks to this market mix modeling tool, our client can see the probable effect of decisions made on the national or regional level. They can also determine how to effectively allocate media and promotional spends, proceeding forward with a new level of clarity and certainty.
