How do I build a marketing mix model?

Imagine you’ve got an opportunity to prove yourself with your first marketing mix modeling project. It’s a big topic: what’s the minimum viable thing to do first?


Marketing Mix Modeling

How do you measure the impact of your marketing channels when you can't track users? Marketing Mix Modeling associates spikes and dips in sales with events and actions in marketing, to calculate their incremental impact...More


Mike Taylor

Built a 50-person growth agency.
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Excel experience recommended.
1. Scenario
You recently started as an intern at Vexnomics and are eager for more responsibility. Finally your boss comes to you with an exciting opportunity to build your first marketing mix model!
Charlotte Cook
at Vexnomics

Hey have you got a sec?

We just got a new client, but the analysts are all at capacity.

I know you are looking for more responsibility: would you want to take this on?

I can walk you through how it works. It should be a pretty simple model and the client is an old friend of mine – it'll be a good project to learn on.

So what do you say? Are you interested?

This course is a work of fiction. Unless otherwise indicated, all the names, characters, businesses, data, places, events and incidents in this course are either the product of the author's imagination or used in a fictitious manner. Any resemblance to actual persons, living or dead, or actual events is purely coincidental.

2. Brief

Marketing mix modeling (MMM) is a statistical technique that helps companies analyze past marketing and sales data to determine the most effective marketing strategies for future growth. It involves using historical data to model the relationships between various marketing inputs and sales outcomes, and then using those models to simulate the impact of different marketing scenarios on future sales.

The "marketing mix" in MMM refers to the four key elements of any marketing strategy: product, price, promotion, and place. These elements are often represented by the acronym "4Ps". MMM helps companies understand the relative impact of each of these elements on sales, and how they interact with each other. For example, a company might use MMM to determine the optimal price for a product, or the most effective mix of advertising and sales promotions.

MMM typically starts with a large dataset of historical sales and marketing data, which is then cleaned and prepared for analysis. This data is used to create models that describe the relationships between the different marketing inputs and sales outcomes. These models can take many forms, including linear regression models, time series models, and econometric models.

Once the models are built, they can be used to simulate different marketing scenarios and predict the likely impact on sales. For example, a company might use MMM to evaluate the impact of a price increase on sales, or the effect of a new advertising campaign on brand awareness. This allows companies to make more informed decisions about their marketing strategies and allocate resources more effectively.

MMM can also be used for optimization, which is the process of finding the best combination of marketing inputs that maximizes a specific performance metric, such as profit or market share. This can be done by using optimization algorithms, such as linear programming or genetic algorithms, to find the optimal solution.

MMM is a powerful tool for companies of all sizes, and can be applied to a wide range of industries and products. It can be used to optimize advertising and promotional campaigns, evaluate the effectiveness of different distribution channels, or determine the optimal pricing strategy. MMM can also be used to forecast future sales and identify potential market opportunities.

However, MMM is not without its limitations. One of the main challenges is that it relies on historical data, which may not be representative of future conditions. Additionally, MMM models can be complex and difficult to interpret, which can make it hard for non-experts to understand the results. Another challenge is that MMM can be time-consuming and resource-intensive, which can make it difficult to implement in some organizations.

3. Tutorial

00:01 Hey, let's learn how to build a really simple marketing mix model. So, you know, I say really simple. I mean really simple compared to the normally complex task.

GoolyBib KS Model
4. Exercises
5. Certificate

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