BUS565-M3D1: All about Marketing Mix Modeling, Pirates, and Climate Change
Marketing Mix Modeling
Marketing Mix Modeling is the process that uses statistical analysis to estimate, maximize, and predict how multichannel marketing tactics are impacting the company (Cole, 2011). It attempts to quantify individual marketing activity’s impact on sales volume and accounts for the effect of controllable, semi-controllable, and uncontrollable external factors. With this information in their arsenal, the company can devote more of its money to the areas in their marketing mix that have the largest likelihood for a positive impact on sales (Weiner, Arnorsdottir, Lang, & Smith, 2010). Areas of waste can be removed, and the marketing process should become more efficient and produce a larger ROI.
Every model is imperfect, though, and the marketing mix model is no exception. In this model, if every possible variable is not entered, its accuracy is decreased. It would be impossible to enter every variable into the model, though. Also, the many facets of PR are not always known, and so important factors might be unintentionally excluded, such as news that might have stifled sales that was out of the control of the company (Weiner, Arnorsdottir, Lang, & Smith, 2010).
Also, the mixed media model mostly recognizes correlations that will describe how related two variables are (“Module Notes,” n.d.). This simply tells us correlation, though, and not causation. The measurement doesn’t say if X causes Y, if Y causes X, or even if they are both caused by an outside variable (Cooper and Schindler, 2014). In the very well researched (I’m sure) graph below, Average Global Temperature is negatively correlated to the number of pirates, with temperature drastically increasing as the number of pirates has quickly diminished. The correlation is strong, but it does not prove causation. Becoming a pirate will most likely not help to curb global warming. Some correlations might be pure coincidence, or there may be a third unidentified variable causing the correlation.
Applying Marketing Mix Modeling to Facebook
In the analyzing of Facebook content that we completed last week, the reliability and validity of the measurements could be questioned, and the time that it would take to conduct a more thorough analysis would probably make the measure inefficient. With marketing mix modeling software, the company can quickly find “forward looking, predictive analytics” (Cole, 2011). In social media, lightning fast methods are needed to be able to consume, interpret, and utlize data to maximize the positive effects of social media marketing (Cole, 2011).
Cole, Z. (2011, December 7). Social Business: Using Marketing Mix Modeling to Maximmize ROI. Retrieved from Social Business News: http://www.socialbusinessnews.com/marketing-mix-model/
Cooper, D. R., & Schindler, P. S. (2014). Business Research Methods (12 ed.). New York, NY: McGraw-Hill Companies, Inc.
Module Notes: Standards for PR Measurement. (n.d.). Retrieved from Excelsior College: https://mycourses.excelsior.edu/webapps/blackboard/execute/displayLearningUnit?course_id=_50263_1&content_id=_2296326_1&framesetWrapped=true
Weiner, M., Arnorsdottir, L., Lang, R., & Smith, B. G. (2010). Isolating the Effects of Media-Based Public Relations on Sales: Optimization Through Marketing Mix Modeling. This Institute for Public Relations Commission on PR Measurement and Evaluation. Retrieved from http://www.instituteforpr.org/media-based-pr-on-sales/