Marketing mix modeling (MMM) was designed in the 1960s to encompass the most significant factors that influenced how marketers deliver value to consumers. The marketing mix is outlined by the “four Ps:” product, price, promotion, and place. When marketing a product or service, these 4 elements interact with one another to improve overall marketing performance.
However, marketing mix modeling is quite an old practice and the way that we market products has changed dramatically since then due to the advent of marketing technology, digital advertising, and other disruptors. This has called its efficacy into question among the newest generations of marketers, leading some to reassess the way that they advertise their products and services.
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 modeling emerged in a time where 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 modeling emerged as a way to inject some science into a business’s marketing decisions.
But, like any scientific theory, marketing mix modeling is a reflection of its time – and it’s not immune to being tested or built off of. Most of our modern approach to marketing does still have ties to the 4Ps, whether it’s in the foreground or background. Let’s break down exactly what these 4Ps were, and what they mean in the context of MMM.
- Product - Clearly, what you’re selling is important. However, think deeper about the product. What need does it solve, and what group of people have 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 a snappy name that your target audience will like. This requires an in-depth view of your target market, and lots of consumer research!
- Price – Without a price, you can’t sell your product. However, pricing is more than just a number. It affects a customer’s perception of your 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 you may want to work into your 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 suburban shopping malls for maximum availability.” Today, this is most complex, as the customer journey is much more dispersed. We need to think about where their purchase journey begins (Instagram? Google?), where it ends (Your website? Inside a store?), and all of the touchpoints 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 your product is, why they need it, and how they can get it. When designing promotions consider what will maximize your exposure to the right group of people.
Much of our modern understanding of marketing has been built off of 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 your 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, your campaign shouldn’t put this model at its center. It’s a supplement, if you decide to use it at all.
Marketing mix modeling 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 emerged in a time where 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 will engage with your brand across multiple channels, creating a dispersed customer journey that must be tied together. This muddies the dimensions of “place” and “promotion,” making them too complex for a simple model.
Today, marketing playbooks are driven by constant measurement and analysis, allowing you to get a snapshot of exactly how your campaigns are performing on a day-by-day, or even hour-by-hour, basis. With these answers available almost instantly, marketers are expected to shift their strategy in tune with consumer reactions. Unfortunately, the 4Ps cannot handle this rigorous, time-sensitive assessment, and is often reevaluated on a monthly or yearly basis. Therefore, the 4Ps are at a significant risk to being relegated to the halls of marketing history.
Adapting Your Organization to New Marketing Models
If you like MMM, and find that it helps your teams find direction in their campaigns, then by no means do you need to halt its use entirely. After all, the 4Ps are an incredible way to inform stakeholders outside of marketing about the jist of your strategy. Instead, you must consider new processes and measurements that fully support modern marketing campaigns.
A novel tactic like unified marketing measurement (UMM) will provide much more comprehensive results than a more outdated practice like marketing mix modeling. UMM combines both aggregate and person-level data to get a comprehensive view of how consumers interact with your advertisements, regardless of whether they interact online or offline. IT provides timely results just moments after a consumer interacts with your marketing message, and tracks them from channel to channel. Then, it can be integrated with an advanced marketing analytics platform that can estimate the trajectory of your campaign, and record this information in an organized manner.
With UMM, your organization can continue to use MMM to guide internal discussions, especially among those who are not marketing experts. By integrating UMM, you can eliminate blind spots through accurate measurement and attribution, opening the door for a new, data-driven way to conduct marketing.
Final Thoughts
The way that we conduct marketing 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 your 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 your strategy, your organization can enjoy all the benefits of marketing mix modeling while gaining a competitive advantage.
