Lecture 5 Market response model 2 PDF

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Download Lecture 5 Market response model 2 PDF

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5: Market response model 2: resource / budget allocation Part Part Part Part Part

1: 2: 3: 4: 5:

A recap The ADBUDG Model A classic marketing problem Calibration with subjective data The idea of budget allocation

Part 1: A recap of market response model Y = a + bx Y = 0.42 – 0.014 * x We can modify the model by changing its mathematical form so that we give the model flexibilities

Part 2: The ADBUDG Model The ADBUDG Model was originally proposed by little (1970), widely used to model market response to advertising budget. It has the following mathematical form:

Revenue or Profit

Marketing (Advertising) budget

Y

X

It is widely used to:   

     

Decide the level of annual advertising budget, given a target revenue/profit Allocating budget across different brands, customer segments etc. Explore potential revenue/profit

It has a flexible graphic form: it can be s-shaped curve or a concave curve b represents the minimum value of Y a represents the maximum value of Y c determines the shape of the ‘curve’ 0...