Understanding promotion effectiveness and profitability

Date of publication: September 1, 1996

Abstract:

This paper introduces and explains a process for analyzing and understanding promotion effectiveness and profitability combining the use of information sources, state-of-the-art modeling techniques and procedures. The problems of simply managing large-scale databases and the challenges facing managers, marketing scientists, econometricians and statisticians attempting to extract relevant business facts and test critical hypotheses have been discussed in the literature. This paper goes beyond reviewing the knowledge base to discuss an approach to managing large amounts of data when the objective is flexibility in the application of quantitative tools and procedures providing output for understanding the current business environment and leading to the development of a more efficient (or optimal) promotion plan. Each element of the marketing mix - and the components of both maximizing incremental sales and marketing return on investment are discussed with empirical examples, using both new software and systems.

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