A Fast-Moving Consumer Goods (FMCG) retail company had invested significantly in marketing campaigns across multiple channels, including TV commercials, radio spots, online ads, print media, and various promotional events.
The Challenge
They noticed steady sales growth but needed help pinpoint the most influential marketing activities. Their objective was to determine the individual contribution of each marketing channel to sales and optimize future marketing budget allocations.
The company turned to Lifesight to employ Marketing Mix Modeling (MMM) to allocate its budget more effectively and improve its ROI.
The Solution
The FMCG brand turned to Lifesight in a quest for actionable insights and a more structured marketing strategy.
The FMCG brand undertook a comprehensive data collection initiative that spanned a three-year period. They meticulously compiled crucial metrics, including monthly sales figures, expenditures on various marketing channels, and actions taken by competitors. The company even factored in external influences, such as economic conditions and seasonal variations, to enrich its dataset further.
Lifesight employed regression analysis in the next phase to construct a Marketing Mix Model (MMM). The goal was to unearth the underlying relationships between their diverse marketing activities and sales performance. By doing so, Lifesight’s team aimed to establish a data-driven foundation for future marketing decisions.
Findings
- Armed with a validated model, the brand’s marketing team engaged in scenario analysis. This entailed manipulating marketing budgets across different channels within the model to forecast potential impacts on sales. The exercise empowered them to explore many what-if scenarios, offering them valuable foresight into how different budget allocations could influence their bottom line.
- In a deep-dive analysis of sales drivers, several pivotal insights emerged. While initially potent, TV advertising hit a point of diminishing returns—making it essential to diversify media spend.
- Conversely, digital ads, particularly on social media and search engines, consistently delivered strong ROI and effectively engaged younger audiences.
- Print ads, though stable, offered limited growth potential, warranting a reduced focus on future strategies.
- Seasonal promotions, especially during holidays, are sales goldmines that underscored the need for calendar-smart marketing. Moreover, external factors like economic conditions and competitor moves aren’t just background noise; they directly impact sales, necessitating an agile, responsive marketing approach.
Actionables
To maximize ROI, the retail brand devised a laser-focused action plan.
- Cutting TV ad spending to an optimal level, nixing wasteful over-investment.
- Pumping more funds into high-performing digital channels like Google, Facebook, and TikTok to zero in on platforms favored by their core audience
- Ramping up seasonal promotions, capitalizing on proven holiday sales surges.
- Monitoring market trends and competitor moves to counter any potential sales hiccups swiftly.
Key Results
After a year of implementing changes based on the MMM insights, the brand saw a on their marketing spend. Sales growth was more robust, and the company felt, knowing they were data-backed.
