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How should I allocate my marketing budget to increase ROI?

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Marketing mix analysis gives birth to new strategy for leading baby care brand

The Business Challenge

In spite of increased marketing spending behind their diaper brand, the company was realizing minimal return. Looking at their raw internal data, they couldn't pinpoint the reason.

Fractal Analytics was called in to identify which marketing activities had the greatest impact on revenue and would enable them to create the optimal marketing mix.

The Solution

Various factors were at play: advertising, in-store promotion, online activity, pricing strategy, and competition. Our analysts created an economic marketing mix model to identify which elements were supporting the brand's growth over time, and which were not. By quantifying the relationship between each element and sales volume, the company would be able to reallocate their funds with confidence.

"We pulled together vast amounts of data from various sources within the company to build an optimized model," said Amit Gupta, Fractal's Director of Marketing Optimization and Consumer Insights. "We could now give them a detailed snapshot of the business impact of each growth driver in their marketing mix."

What the data revealed
The client was surprised to learn that more than 30% of the brand's sales growth was driven by reduced pricing, while less than 2% was attributed to all forms of advertising. "This was a real eye-opener," said the Baby Care VP. "We were also astonished to discover that suspending in-store promotions was costing us 5% in growth."

Media spending analyzed
We took a close look at the client's advertising spending and exposed several inefficiencies. Radio ads were not contributing to sales and their TV budget was being wasted because of misallocated GRPs. "These insights were a game-changer for us," the client said.

The Results

Based on the analysis, Fractal Analytics provided the client with actionable recommendations and corresponding sales projections. The new approach helped the Baby Care division reach their sales goals while moving away from a price reduction strategy.

Our consultants' recommendations included increasing distribution of regular diapers in a leading national chain, shifting a percentage of marketing dollars from diaper-pants to regular diapers, reallocating radio budget to magazine ads, moving spending from one national chain to another, and increasing the volume of TV commercials.

The project sales impact from all of Fractal's recommendations totaled $1.16 million.