Marketing Mix
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Transcript of Marketing Mix
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Rajkumar Venkatesan
Marketing Mix
Vodka Industry
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Rajkumar Venkatesan
Effect of Marketing Mix - Industry
Does sales increase with a price increase?
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Unit Sales ('00s) Price $ Ad ('000s)
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Rajkumar Venkatesan
Except Grey Goose No Brand Changes Tier
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
AbsolutBelvedereCirocGilbey'sGrey GooseMcCormickPopov
PravdaSeagram'sSkolSmirnoff
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Rajkumar Venkatesan
The Best Sellers
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Rajkumar Venkatesan
Change in Sales is More Relevant
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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Absolut
Belvedere
Ciroc
Gilbey's
Grey Goose
McCormick
Popov
Pravda
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Skol
Smirnoff
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Rajkumar Venkatesan
Unit Sales and Price – Skol
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Rajkumar Venkatesan
Unit Sales and Price - Smirnoff
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Rajkumar Venkatesan
Marketing Mix Models - Comparison
AdvertisingRegression
CharacteristicPrice Print Broadcast Outdoor Adj.
R2Unit Sales -0.046 0.02 0.02 0.006 0.98Change in Sales 0.02 0.02 -0.003 -0.01 0.14Add Brand Tier -0.02 0.015 -0.003 -0.012 0.17Add Competition -0.04 0.015 -0.003 -0.013 0.19
Price Coefficients are more sensitive than Advertising
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Rajkumar Venkatesan
Print and Outdoor AdvertisingOutdoor Print
Outdoor 1
Print 0.53 1
AdvertisingRegression
CharacteristicPrice Print &
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Broadcast Adj. R2
Print & Outdoor -0.04 0.005 -0.009 0.13
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Rajkumar Venkatesan
Price Elasticity
Price Elasticity =[Change in sales/Change in Price] * [Price/Sales]
Price Elasticity = Coefficient of price when ln(sales) is regressed on ln(price)
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Rajkumar Venkatesan
Print Ads
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Rajkumar Venkatesan
TV Ads – Newer Trend
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Rajkumar Venkatesan
Marketing Mix Models - Summary• High R-Squares can be misleading
• Change in sales better than level of sales
• Evaluate relationships among the independent variables
• Competition, new entrants, brand equity have an influence on a brand’s price and advertising elasticity
• Give thought to handling missing values.