The Business Challenge
What can you do when your company's hair care products are experiencing declines in both sales volume and market share, even though category volume was rising?
To add insult to this dual decrease, ad spending for new product introductions, in-store displays, heavily discounted products at promotional events, catalog ads, and TV commercials had increased 22% over the past two years –– without a corresponding rise in sales across the client's brands. It was a critical time to judiciously re-allocate the marketing budget to optimize support activities and revive the brand.
The client tasked Fractal Analytics with analyzing the current media spending. We deployed marketing mix models to decompose the sales volume for each support activity, then measured the current ROI as a baseline.
Next, our scientists quantified the impact of the client's new product launches on the overall brand portfolio. We also identified the cannibalized products and the additional media volume by shifting money into other buckets.
"Fractal wanted to look behind the curtain to determine exactly what was working and what wasn't in past marketing activities," said Pranay Agrawal, co-founder and EVP Global Consulting and Account Management at Fractal. "We discovered huge inefficiencies in the execution of certain promotional activities, resulting in mistiming of events, non-optimal levels of media support, and overall sub-par performance with both sales and market share for our client's hair care products.
Fractal Analytics restructured and redefined the media spending with a focus on TV advertising to realize an overall incremental sales rise of nearly 35%. This was accomplished by eliminating diminishing returns, decreasing copy wear-outs, considering differential ROI from ads of different lengths, optimizing the number of TV messages on the air, and creating a halo effect on the most popular hair care products.
By deploying the newly allocated marketing media mix during the next financial year with various revised activities –– and by keeping the existing media budget the same –– the client was able to generate a $5 million increase in sales.