Many people who are involved in marketing or sales would have heard of, or come across the Marketing Mix modelling (MMM). It was designed in the 1960s to encompass the most significant factors that influence how marketers deliver value to consumers. It outlines and measures the success of marketing through the scope of the ‘Four Ps’ of marketing which are Product, Price, Promotion, and Place. The 4Ps outline the key elements that every business should observe, assess, and use to optimize their marketing communication campaigns.
However, marketing mix modelling is quite an old practice, and the way products are marketed has changed dramatically since, especially with the advent of the internet, marketing technology, digital advertising other disruptors.
Let’s take a closer look at how marketing mix modeling emerged, and understand why it used to be a staple among advanced marketing teams. Then, we must assess whether MMM is still capable of delivering the same value in today’s marketing environment.
What’s the Purpose of Marketing Mix Modeling?
Marketing mix modelling emerged at a time when marketing departments were often controlled by the gut feelings and anecdotes of the team’s most senior members. This less structured approach was effective for most of the history of marketing – but as the day-to-day lives of consumers became more commercialized, it was clear that there was a need for a concrete, consistent way to measure and assess campaigns. In the face of these demands, marketing mix modelling emerged as a way to inject some science into a business’s marketing decisions.
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Let’s break down exactly what these 4 Ps are, and what they mean in the context of MMM.
Product – Clearly, what a company is selling is important. However, it needs to think deeper about the product. What need does it solve, and what group of people has that need? How does it solve that problem? If the product doesn’t clearly fulfill a need, it is not a truly feasible product. If the product is feasible, outline its features and benefits, then give it an attractive name that its target audience will like. This requires an in-depth view of the target market, and lots of consumer research.
Price – Without a price, it is near impossible to sell any product. However, pricing is more than just a number. It affects a customer’s perception of a product – an expensive product is seen as high quality, while an inexpensive product is seen as low quality. Furthermore, there are pricing strategies, like price anchoring, that a business may want to work into its product offerings.
Place – This dimension asks not only where customers can find your product, but how it gets there. When MMM was designed, this may have meant “we will deliver this from our warehouse to the store or shops for maximum availability.” Today, this is most complex, as the customer journey is much more dispersed. It needs to consider where their purchase journey begins (Instagram? Google?), where it ends (the website? Inside a store?), and all of the touch points that occur in-between.
Promotion – When most people think of marketing, they think of this aspect of the 4Ps. Promotion is what ties every other step of the process together by telling consumers what the product is, why they need it, and how they can get it. When designing promotions, the brand must consider what will maximize its exposure to the right group of people.
Much of our modern understanding of marketing has been built round MMM – meaning that no matter what, it is a valuable concept to learn and understand. However, today’s marketers must understand whether or not the 4Ps should continue to dictate their strategy, or if it should be phased out in favor of cutting-edge tools to plan and assess its marketing strategy.
So, what’s wrong with the 4Ps?
The truth is, the modern world of marketing can’t be reflected solely through concepts as simple as marketing mix modeling. In practice, brand campaigns shouldn’t put this model at its center. At most, it is simply a supplement, if it decides to use it at all.
Marketing mix modelling came into being sixty years ago. During that time, CMOs or Marketing Strategists were not typical marketing mainstays – and today, the average knowledge of a strategist extends far beyond what fits into the framework of the 4Ps. MMM also came when there were comparatively few media channels, with most being limited to print, radio, television, and in-person marketing. However, the digital world blew this wide open. Now, customers engage with brands across multiple channels, creating a dispersed customer journey that must be tied together. This belittles the dimensions of “place” and “promotion,” making them too complex for a simple model.
Adapting new marketing models
If an organization likes MMM and finds that it helps its teams find direction in their campaigns, then by no means does it need to halt its use entirely. After all, the 4Ps are an incredible way to inform stakeholders outside of marketing about the gist of its strategy. Instead, the brand must consider new processes and measurements that fully support modern marketing campaigns.
Last line
The way that marketing is conducted has changed a lot, over the past sixty years – so, people are justified in their skepticism of MMM. Without a doubt, it is no longer a complete or cutting-edge solution that encompasses every aspect of marketing. However, it’s not worth disposing of completely – especially if an organization believes it still helps them accomplish the marketing goals they set forth.
Instead, marketers should augment their existing MMM approach with a more advanced approach to marketing attribution and measurement. By using tactics like unified marketing measurement to bolster strategy, organizations can enjoy all the benefits of marketing mix modeling while gaining a competitive advantage.
