Transcript Vodka Analysis Class Slides

Marketing Mix
Vodka Industry
Rajkumar Venkatesan
Effect of Marketing Mix - Industry
450
400
350
300
250
200
150
100
50
0
1994
1995
1996
1997
1998
1999
Unit Sales ('00s)
2000
2001
Price
2002
2003
2004
2005
2006
2007
$ Ad ('000s)
Does sales increase with a price increase?
Rajkumar Venkatesan
Except Grey Goose No Brand Changes Tier
10000
9000
8000
Absolut
Belvedere
7000
Ciroc
6000
Gilbey's
Grey Goose
5000
McCormick
4000
Popov
Pravda
3000
Seagram's
2000
Skol
Smirnoff
1000
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Rajkumar Venkatesan
The Best Sellers
Rajkumar Venkatesan
Change in Sales is More Relevant
200%
150%
Absolut
Belvedere
Ciroc
100%
Gilbey's
Grey Goose
McCormick
Popov
Pravda
50%
Seagram's
Skol
Smirnoff
0%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
-50%
Rajkumar Venkatesan
Unit Sales and Price – Skol
Rajkumar Venkatesan
Unit Sales and Price - Smirnoff
Rajkumar Venkatesan
Marketing Mix Models - Comparison
Advertising
Regression
Characteristic
Unit Sales
Price
Print
Broadcast
Outdoor
Adj.
R2
-0.046
0.02
0.02
0.006
0.98
Change in Sales
0.02
0.02
-0.003
-0.01
0.14
Add Brand Tier
-0.02
0.015
-0.003
-0.012
0.17
Add Competition
-0.04
0.015
-0.003
-0.013
0.19
Price Coefficients are more sensitive than Advertising
Rajkumar Venkatesan
Print and Outdoor Advertising
Outdoor
Outdoor
1
Print
0.53
Print
1
Advertising
Regression
Characteristic
Print & Outdoor
Price
Print &
Outdoo
r
Broadcast
Adj. R2
-0.04
0.005
-0.009
0.13
Rajkumar Venkatesan
Price Elasticity
Price Elasticity =
[Change in sales/Change in Price] * [Price/Sales]
Price Elasticity =
Coefficient of price when ln(sales) is regressed on ln(price)
Rajkumar Venkatesan
Print Ads
Rajkumar Venkatesan
TV Ads – Newer Trend
Rajkumar Venkatesan
Marketing Mix Models - Summary
• High R-Squares can be misleading
• Change in sales better than level of sales
• Evaluate relationships among the independent variables
• Competition, new entrants, brand equity have an influence
on a brand’s price and advertising elasticity
• Give thought to handling missing values.
Rajkumar Venkatesan