A North American CPG firm increases Annual Sales by $18M due to efficient Marketing Spend Allocation

About

The client is a leading manufacturer and marketer of branded consumer foods, who sells across retail outlets in North America.

Challenges

  • The conventional marketing mix optimization approach was not effective, as it minimized returns on marketing budget.
  • With a slew of products across multiple categories, brands and regions, the client experienced a lot of inconsistencies in terms of data, promotional activities and approach.
  • The client wanted to implement a machine learning-based comprehensive solution to provide insights, quantify marketing ROI and optimize the marketing mix.

Solution

Tenzai adopted the Purpose Driven AI approach to develop an AI-empowered marketing mix solution for the client.

As a first step, an analytics data mart was built by integrating data from multiple data sources like promotion data, retail POS data, digital campaigns, competition sales and campaigns etc.

Machine learning was developed to measure the impact of baseline variables and target promotional variables on the outcome variable.

The model was overlaid with an optimization engine that enabled business users to configure constraints to deliver an optimal marketing mix.

Business users could evaluate promotions based on multiple parameters like volume, margin contribution, new launch lift, share impact, shopper lift etc.

An intuitive web-based tool was developed to help the business users input different values and simulate multiple scenarios.

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Results

The AI-powered marketing mix solution was comprehensive in scope, covering all phases of market mix modelling like pre-planning, planning and execution.

The solution with its powerful simulation and optimization capabilities helped the business quantify the relationship between multiple variables, channels and business outcomes.

  • A $18M increase in annual sales revenue was achieved by optimizing marketing spends across diverse marketing channels.
  • The new solution helped the client increase customer base by 24%
  • The client was able to reduce the marketing expense by 14% and increase overall marketing ROI by 19%.