The model is estimated to have saved 15 – 30% of costs on four new product launches in Germany in 2012 and 2013.
New product launches are a major responsibility for brand and product marketers, accompanied with big budgets and increasing pressure to prove ROI and efficiency. This is especially challenging when managing the complex array of channels and media mix that is now commonplace. This paper explains how the challenge was approached in the context of the automotive sector for four new car launches by Mercedes-Benz, as part of a wider business strategy that involved a “new product offensive”.
The exact model used is complex and mathematical, but relied on a “single-source database” of consumer responses and econometric modelling to identify “advertising elasticities” which allowed the balance of media channels to be adjusted efficiently. These decisions were made against predetermined advertising KPIs like recognition, based on data collected “at the individual level.”
The authors state that their model may be applicable to other sectors provided when brand building is the main objective, provided the specific KPIs and metrics were adapted. They also believe that the overall logic of their approach could help marketers with other “difficult to measure” activities like sponsorship and events.
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[30 minute read; article may be behind a paywall]