Marketing Mix Modelling (MMM) is a statistical analysis method that enables companies to measure and optimize the impact of their marketing actions on sales and commercial performance. It uses historical data to understand how the different levers of the marketing mix – product, price, place (distribution) and promotion – influence financial results.
1. What is Marketing Mix Modelling?
MMM allows you to build a model that links marketing efforts (advertising, promotions, pricing, etc.) to key performance indicators such as sales or turnover. This model helps identify which actions generate the best return on investment (ROI), and which are less effective.
2. MMM objectives
The main aim of Marketing Mix Modelling is to maximize the effectiveness of marketing investments. By analyzing historical data, companies can identify :
- Which marketing mix levers are most effective.
- How to allocate the marketing budget optimally.
- The impact of external factors such as competition or seasonality on performance.
3. Marketing mix components in MMM
MMM takes into account the four main elements of the marketing mix:
- Product: Analyzes the impact of product features, range, quality and innovations on sales.
- Price: Study price elasticity, i.e. how price changes influence demand.
- Place (Distribution): Analysis of the distribution channels used to make the product accessible to the consumer.
- Promotion: Measures the impact of promotional, advertising and communication activities on awareness and sales.
4. How does MMM work?
MMM is based on the collection and analysis of large quantities of data from internal sources (sales, advertising costs, CRM) and external sources (competition, economic conditions). This data is then processed using statistical techniques such as multiple regression, to model the relationship between marketing variables and sales results.
The final model allows companies to simulate different scenarios, for example :
- What would happen if we increased the advertising budget by 10%?
- How might a price reduction affect demand?
5. Advantages of MMM
- Marketing budget optimization: By identifying the most effective levers, MMM enables resources to be allocated more efficiently.
- Better decision-making: MMM provides concrete data to help decision-makers develop strategies based on measurable results.
- Performance forecasting: By analyzing historical data, MMM enables us to anticipate future performance according to different scenarios.
6. MMM limits
Although MMM is a powerful tool, it has certain limitations:
- Dependence on historical data: Models are based on past data and may not always reflect future trends.
- Complexity of digital media: Traditional MMM is sometimes less suited to assessing the impact of digital media in real time, where attribution is more complex.
