Marketing Mix Modelling to better allocate advertising and promotional investments
To better allocate advertising and promotional investments between brands and between media, the company could use marketing mix modeling.
Context and challenge:
A retail company is looking to increase customer loyalty and sales by offering promotions at the right time and place. However, the company has a large number of products and a diverse customer base, making it difficult to determine the most effective promotion strategies. The company wants to use machine learning to analyze customer data and identify the best promotions to offer at specific times and locations.
To address this challenge, the company can take the following approach:
1/ Collect and clean customer data: The first step is to gather customer data from various sources, such as purchase history, demographics, and location. This data will need to be cleaned and organized in a format that can be used for machine learning.
2/ Train a machine learning model: The company can use a variety of machine learning algorithms, such as decision trees, random forests, or neural networks, to analyze the customer data and identify patterns that indicate the likelihood of a customer responding to a promotion.
3/ Test and fine-tune the model: The company can use a portion of the customer data to test the accuracy of the model and fine-tune the model as needed.
4/ Implement the model: Once the model is trained and tested, the company can use it to predict the best promotions to offer at specific times and locations.
By using machine learning to analyze customer data, the company can significantly improve the effectiveness of its promotions. The company can expect to see an increase in customer loyalty and sales as a result of offering the right promotions at the right time and place. In addition, the company can use the insights from the machine learning model to continuously improve its promotion strategies over time.
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