Market Response Modeling:A Case Study

MarKeT resPonse ModeLinG: a Case sTUdy By Kevin Gray Describes in simple terms how a market response model works … to come up with a best course of action, go through different scenarios, and estimate their results … a market response model is not a substitute for experienced judgment, but another input to arrive at the best plan. M M arketers need forecasts of market share or sales volume for their brands. In addition, to develop effective marketing plans they have to have an understanding of how the various components of the marketing mix (price, TV advertising, in-store displays, etc.) affect their market share or sales volume over time. In other words, simple forecasting is not enough; “causal modeling” is also required. MarKeT resPonse ModeLinG Market Response Modeling (MRM) is causal modeling in which we attempt to explain or predict market share or sales volume from marketing inputs. MRM may be thought of as a form of key driver analysis with a time dimension, estimating the relative influence of various components of the marketing mix as well as forecasting their effect on future market share and/or sales volume. “What If” simulations can also be performed ...