MMM (Marketing Mix Modeling) is an important analytical method that can transform strategic marketing decision-making in companies and organizations, improve a company's competitiveness, and contribute to increased sales. However, many companies treat MMM as merely tactical and are unable to fully utilize its capabilities.

As MMM experts, XICA studies the latest global trends and accumulates knowledge gained through actual projects while constantly pursuing optimal utilization methods. Based on this experience, we would like to introduce some important points that we would like to emphasize to executives and business managers who want to maximize the strategic impact of MMM projects.

How MMM contributes to business outcomes

Before looking at the key points, let's briefly explain how MMM contributes to corporate growth.

• Clarifying ROI and achieving optimal investment allocation:
  By quantitatively visualizing the ROI of each advertising and marketing initiative, it becomes possible to allocate budgets to the most effective channels and initiatives, enabling efficient resource allocation with reduced waste.
• Strategy planning based on future predictions:
  Since simulations can be performed before implementing measures, it is possible to develop strategies that maximize marketing results while reducing risks.
• Build a competitive advantage:
  By implementing strategies that are better than competitors based on the selection of effective measures, you can strengthen your competitiveness in the market while reducing customer acquisition costs.

As such, MMM is an effective analytical method that contributes greatly to business results, but to get the most out of it, active involvement from management is essential. For example, when progressing a project, it is necessary to work with not only the marketing department but also other departments, and promote data-based decision-making throughout the organization. In particular, with management taking the lead, company-wide collaboration is strengthened, decision-making speed improves, and the process to execution becomes smoother. Furthermore, by spreading a data-driven culture, an environment will be created in which MMM can be continuously and effectively used, making it possible to build strategies with a medium- to long-term perspective, rather than simply pursuing short-term ROI.

10 points for strategic use of MMM

While many companies, including service providers, focus on the technical aspects of MMM, true success depends on a holistic approach. And to achieve this, executive leadership is required. Below, we will explain 10 specific points that executives should focus on to make MMM successful.

<Vision and strategic positioning>

Point 1: Use it not only for past verification but also for future-oriented decision-making

Some companies use MMM as a one-time "health check" to verify the effectiveness of past marketing activities. However, the analysis results are not always consistent over time. The situation changes daily depending on the market environment, such as competitor movements and trends, so it is important to continue analyzing regularly.

Furthermore, MMM is not merely a tool for verifying the past, but can also be used for continuous decision-making with an eye to the future. It allows you to quickly detect changes in the market, formulate strategies, and implement measures. Then, review the results with MMM and make repeated course corrections. By continuing this cycle, you can produce sustainable results. This is the essential value of MMM.

Point 2: Create a vision through leadership

Before introducing MMM, you first need a clear vision of "what do you want to achieve through MMM?" It is important that the management takes the initiative in drawing this out. When formulating a vision, its feasibility is important. It is important to share a vision that fosters a positive attitude so that as you move toward the vision, you can feel that you are getting closer to realizing it, even if only little by little. Leadership is required to promote change from the current situation to the future while securing the necessary resources (budget, technology, human resources, interdepartmental collaboration, etc.).

Point 3: Create an implementation plan to strategically utilize MMM

The true value of MMM is that it leads to fundamental changes in a company's business strategy and marketing strategy. It is necessary to make a specific implementation plan together with management and key stakeholders (marketing manager, data analysis team, etc.), and to be flexible in adjusting the plan while regularly checking the progress. Below is a summary of the general schedule from the implementation phase to deployment (12 to 18 months) and the main To-Dos. Please use it as a guideline when making a plan.

1. Project preparation (approximately 1-2 weeks)

• Clarifying project goals and scope
• Assembling the team and identifying stakeholders

2. Data collection and cleansing (approximately 2 to 4 weeks)

• Build a hypothesis and collect necessary data (ideally from the past 2-3 years)
• Data Integrity Check

3. Model construction and verification (approximately 3 to 6 weeks)

• Initial construction and refinement of analytical models
• Implement improvements to achieve a forecast accuracy goal (e.g., error of 10% or less)

4. MMM operation and PDCA cycle implementation (approximately 6 to 9 months)

• Regularly update analytical models and review analytical results
• Taking action based on analysis results

5. Internal deployment and expansion (approximately 6 to 12 months)

• Use success stories for other products, brands, divisions or countries to promote the benefits of MMM implementation
• Review project goals and scope to suit the current phase
• Implement a cycle of data collection, model building, analysis, and action for each target

"A practical guide to modern MMM for marketers" provides a comprehensive explanation of more detailed steps and specific steps to take. This is a guide that XICA has published based on its many years of experience and the know-how it has gained from hundreds of MMM projects, so please make use of it.

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A Practical Guide to Modern MMM for Marketers
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<Data utilization system realized through organizational transformation>

Point 4: Shift to data-driven decision-making

Implementing MMM means rethinking the decision-making process itself: from gut feeling to data-driven decision-making, from siloed to integrated planning, from fixed annual budget allocations to more dynamic budget allocations. Executives must champion this new approach and ensure its acceptance across the organization.

Point 5: Review and adjust collaboration between departments and teams

In order to achieve overall optimization based on data-driven decision-making, it may be necessary to significantly reconsider the current organizational structure. It is important to put in place a system that allows smoother collaboration between departments and teams. In the process, resistance to new ways of doing things may arise, but it is important to be prepared to handle such resistance by sending clear messages from management and sharing success stories.

Point 6: Create a system to improve your company's capabilities

For MMM to be successful, it is important to develop the ability to utilize MMM throughout the organization, rather than relying solely on tools and technology. Specifically, training programs on statistics and data analysis could be implemented with the support of external experts to develop personnel who can properly operate MMM. It is also essential to have a process for efficiently collecting and managing data within the company, and an operating system for utilizing the results obtained from MMM in management and marketing decision-making. Cultivating the "ability to use" MMM within the company will ensure that MMM does not end up being a temporary initiative, but will become the foundation for creating sustainable value.

<Growth mechanisms rooted in culture and rules>

Point 7: Establish a data-driven culture

The ultimate goal is to create a culture where data-driven decision-making and improvement cycles are the norm. It is necessary to create mechanisms to encourage experimentation, embrace failure, and share learnings across the organization. For example, proactively giving feedback to improve team capabilities and confidence would be the first step in creating such a mechanism.

Point 8: Build a management system

It is important to gain the support of those involved in change rather than forcing it on them unilaterally. However, it is also essential to have clear rules and mechanisms in place. For example, it is important to create clear goals for measuring success, a mechanism for regularly checking progress, and a framework for clarifying who is responsible.

<Founded of an operational structure to enhance execution capabilities>

Point 9: Clarify budget management and decision-making authority

For the MMM project to demonstrate its value, it is essential to incorporate the use of MMM into the decision-making process. In other words, it is necessary to clearly define which decisions MMM can affect, when and what decisions are required, and who should make those decisions. For example, if the results of MMM analysis are to be used in decisions such as the allocation of the company's marketing budget or review of management strategies, it is necessary to link them to those decision-making cycles.

By clearly indicating which specific measures and investment decisions the output of MMM will affect and predetermining "when," "what," and "who" will make the decisions, all parties involved will understand the value of MMM and the project will become a driving force for strategic transformation rather than merely an analysis. At the same time, this will also help create an environment for a data-driven organization.

Point 10: Leverage MMM at each layer of the organization

Each organizational layer has different issues and agendas of interest. Therefore, it is necessary to develop a process to quickly reflect the results of MMM analysis in decision-making according to the purpose of each layer. The diagram below shows the MMM deliverables that can be used by each layer and the review frequency. Although the roles and decision-making powers at each layer may differ from company to company, please use this as a reference when imagining specific operations.

By utilizing MMM, it becomes possible for section managers to optimize execution, department managers to optimize planning and tactics, and C-suite executives (CMOs) to make strategic decisions, all of which can work together to maximize results.

In conclusion

MMM is not just an analytical tool, but a key to important transformation to drive strategic growth for companies. And the involvement of management is essential for the success of MMM. With management taking the lead, collaboration and processes across the organization will improve, and MMM will not end as a mere experiment, but will become the foundation for producing continuous results. We hope that the 10 points introduced in this article will help you maximize the effectiveness of MMM, improve business results, establish a competitive advantage, and foster a data-driven culture throughout your company.

At XICA, we have a track record of successfully leading MMM projects with over 10 companies for over 270 years. Using this experience, we will support you in implementing MMM in an optimal way for your company and assist you in making strategic decisions using data. If you are looking to grow your company or improve your business results through MMM, or if you would like to strengthen your data-based decision-making and accelerate your marketing success, please feel free to contact us.Contact us.

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XICA Co., Ltd. Marketing Team