Throughout my schooling at NWTC, our instructors have sure drilled into our heads what the marketing mix is. In case you forgot, the marketing mix is basically the core principle of marketing. This is how you market a new product or service. It is made up of the four P’s; product, place, price and promotion. Now, we need to tie up loose ends and figure out how marking analytic people analyze this type of marketing effectiveness.
Marketing Mix Model
According to the book, the marketing mix is “the starting place for marketing analytics professionals who want to apply statistical model to data.” Statistical model is a “formal representation of a theory.” Basically, we get to test a theory about how the marketing mix relates to marketing outcome. The marketing mix model uses the regression technique.
Simple Linear Regression
This is a statistical process that relates the marketing outcome variable, y, as a linear function of a single marketing mix variable, x. We identify y as a marketing outcome variable, but we may find others referring to it as a dependent variable or response variable because it depends on or responds to another variable.
When the time comes to evaluate the success of the model, you will use something called R2. R2 is the proportion of the variability in the Y that is explained by the model.
Moderation in the Marketing Mix Model
The model is accomplished by adding an interaction term to the model. This is the multiplication of two variables.
y = b0 + b1X + b2M + b3(XM) + ε
Overall, I am so glad there are so many tools out there for analytics. This stuff is just over my head.