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Marketing Mix. Vodka Industry. Effect of Marketing Mix - Industry. Does sales i ncrease with a price increase?. Except Grey Goose No Brand Changes Tier. The Best Sellers. Change in Sales is More Relevant. Unit Sales and Price – Skol. Unit Sales and Price - Smirnoff. - PowerPoint PPT Presentation
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Rajkumar Venkatesan
Marketing Mix
Vodka Industry
Rajkumar Venkatesan
Effect of Marketing Mix - Industry
Does sales increase with a price increase?
0
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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Unit Sales ('00s) Price $ Ad ('000s)
Rajkumar Venkatesan
Except Grey Goose No Brand Changes Tier
0
1000
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
AbsolutBelvedereCirocGilbey'sGrey GooseMcCormickPopov
PravdaSeagram'sSkolSmirnoff
Rajkumar Venkatesan
The Best Sellers
Rajkumar Venkatesan
Change in Sales is More Relevant
-50%
0%
50%
100%
150%
200%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Absolut
Belvedere
Ciroc
Gilbey's
Grey Goose
McCormick
Popov
Pravda
Seagram's
Skol
Smirnoff
Rajkumar Venkatesan
Unit Sales and Price – Skol
Rajkumar Venkatesan
Unit Sales and Price - Smirnoff
Rajkumar Venkatesan
Marketing Mix Models - Comparison
AdvertisingRegression
CharacteristicPrice Print Broadcast Outdoor Adj.
R2Unit Sales -0.046 0.02 0.02 0.006 0.98Change in Sales 0.02 0.02 -0.003 -0.01 0.14Add Brand Tier -0.02 0.015 -0.003 -0.012 0.17Add Competition -0.04 0.015 -0.003 -0.013 0.19
Price Coefficients are more sensitive than Advertising
Rajkumar Venkatesan
Print and Outdoor AdvertisingOutdoor Print
Outdoor 1
Print 0.53 1
AdvertisingRegression
CharacteristicPrice Print &
Outdoor
Broadcast Adj. R2
Print & Outdoor -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.
