Marketing Mix Modelling – or MMM as it’s often shortened – is one of the most powerful tools in a marketer’s arsenal. This modelling strategy essentially allows businesses to determine the impact of their marketing efforts on sales and customer behaviour.
After all, isn’t that what marketing is all about? Understanding how our efforts and strategies influence consumer behaviour and ultimately drive revenue.
It’s not quite as easy as watching a campaign play out from afar and assuming success or failure based on how much revenue comes in.
There are a number of factors that can influence sales, and it’s important to be able to identify and measure the specific impact of marketing activities.
Marketing mix modelling helps businesses do just that.
What is Marketing Mix Modelling?
Imagine you’re the head of marketing for an e-commerce company that sells athletic apparel. You decide to launch a new campaign targeting young adults interested in fitness and wellness.
| Marketing mix modelling is the process of using data, statistical analysis, and mathematical models to understand how this specific campaign – along with other various marketing activities – is influencing sales and customer behaviour. |
By examining various data points, such as external factors like economic confidence and internal factors like website traffic, social media engagement, and sales numbers, a marketing mix model can determine the effectiveness of individual strategies within your overall marketing mix.
This information can then be used to make informed decisions about future campaigns, promotional activities, and budget allocations.
The Marketing Mix (also known as the 4 Ps or the 7 Ps in modern marketing theory) is a core concept in marketing mix modelling, too. These include Product, Price, Place and Promotion – all of which play a role in influencing consumer behaviour and sales.
Marketing mix modelling is a way to understand how your 4 Ps are working together to drive results.
What Channels Does MMM Cover?
Examples of Marketing Mix elements:
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The difference between Marketing Mix Modelling and other marketing analytics techniques is that it looks beyond just digital marketing channels.
While digital platforms are certainly important and a huge part of modern marketing strategies, MMM also takes into account offline channels like TV, print ads, and direct mail – all of which still significantly impact sales.
There are also macro-environmental factors that can affect the success (or failure) of a campaign.
Think back to our example of the athletic apparel company targeting young adults for a moment. External factors like seasonality, current events, and economic conditions can all play a role in how successful that campaign will be.
Particularly for athletic apparel brands, major sporting events and trends in health and wellness could impact the success of their marketing efforts, like if the Olympics were happening during the time of their campaign.
Being able to understand everything that is influencing consumer behaviour and sales is key to developing effective marketing strategies. And that’s exactly what marketing mix modelling allows businesses to do.
Learn About Indirect vs Direct Marketing Attribution
Why is MMM Essential for E-commerce Businesses?
The core job of any marketing manager and their team is to drive sales and revenue for their company. In the world of e-commerce, where competition is fierce and consumers have endless options at their fingertips, it’s more important than ever to have a deep understanding of what’s working and what’s not.
MMM helps e-commerce businesses evaluate what factors are driving sales and how much impact each marketing activity is having. That information is invaluable.
Future campaigns, marketing budget allocation and resource management can all be more strategic when based on data analysis rather than guesswork.
Here are just a few of how MMM benefits e-commerce businesses:
1) Enhancing Budget Allocation Across Channels
Budgets are often limited within marketing departments, and knowing where to allocate those funds is crucial so that money isn’t wasted on ineffective campaigns.
MMM can provide a detailed breakdown of how much ROI is being generated from each marketing channel, allowing for smarter and more efficient budget allocation.
For example, social media may prove to be the biggest driver of sales for the athletic apparel company targeting young adults, so they might want to invest more in that channel for future campaigns.
On the flip side, the brand may discover that their in-store promotions aren’t yielding the desired results, and they might decide to reallocate those resources elsewhere.
Understand the Importance of Return on Marketing Investment
2) Strategic Planning & Methodology for High-Demand Periods
Peak times and seasonal fluctuations can have a significant impact on e-commerce businesses. With MMM, companies can understand how external factors are influencing sales and better plan for future high-demand periods.
For example, the athletic apparel brand may find that sales peak during the summer months due to increased interest in fitness and wellness activities.
This information can help them plan their marketing strategies and campaigns accordingly, ensuring they are targeting the right audience at the right time.
3) Reducing Cart Abandonment & Increasing Customer Retention
MMM can provide insight into which marketing activities are most effective in engaging and retaining customers.
By understanding what channels and strategies are resonating with their audience, e-commerce businesses can focus on tactics that will help reduce cart abandonment rates and strengthen customer loyalty.
This might include investing more in email campaigns, implementing a loyalty program, or using targeted social media ads to re-engage customers who have previously abandoned their cart.
It’s thought that the cost of acquiring new customers is five times that of retaining existing ones, so MMM can also help e-commerce businesses save on customer acquisition costs by focusing on strategies that encourage repeat purchases from loyal customers.
However, a balance of acquisition and retention is needed for sustainable growth.
Read More: Why Don’t Existing Customers Shop Like Prospects?
4) Supporting Data-Driven Decision Making
Marketing Mix Modelling relies on a great amount of data to provide the insights it does, and, ultimately, data is power.
Rather than relying on guesswork or assumptions, MMM allows e-commerce businesses to make data-driven decisions based on concrete evidence of what’s working and what’s not.
From pricing strategies to campaign timing, product placement and more, all decisions can be backed by data analysis to set businesses up for success.
What are the Challenges of MMM?
Implementing MMM is no easy feat, and there are some challenges that businesses may face along the way. Some of these include:
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What is the Solution?
Here at UniFida, we specialise in providing smart, data-driven marketing attribution solutions to e-commerce (and service) businesses.
Unlike many basic attribution solutions, we use MMM and combine it with an MTA (Multi-Touch Attribution) model to produce a detailed and accurate view of all marketing activities.
We can track direct, indirect, online and offline channels and look at the customer journey as a whole to provide more comprehensive insights.
Our algorithms are trained on your data, so we understand the nuances of your business rather than just relying on industry averages. This allows us to provide personalised and accurate MMM attribution that can truly benefit your e-commerce company’s marketing efforts.
Discover More About Our Use of MMM
Key Takeaways of MMM
It’s a complex topic that we could dive into for days, but here are some key takeaways to remember about Marketing Mix Modelling:
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Marketing Mix Modelling is one of many tools that businesses can utilise to optimise marketing efforts. You can learn more about marketing attribution models in our Marketing Attribution eBook, or head over to our full blog to see more of our insights.
Check Out the UniFida Blog for the Latest on Customer Insights
Interested in seeing how UniFida’s Marketing Attribution solution could benefit your business? Get in touch today for a free call.
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Jo is a leading expert in the field of marketing measurement, particularly in integrating marketing attribution and econometrics for holistic customer journey mapping and optimised marketing returns. Jo actively promotes best practices in media measurement and sustainable marketing within the wider business community. Jo co-wrote the marketing attribution book ‘The key to proving the true value of marketing’.
