TV advertising, value of, prime-time, retail market.
Analysis of worth of Advertising budget
MJMcCann Consulting
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Retail Market with heavy TV advertising.
How much is enough?

In a retail market where TV (television) played a major role in sustaining brand loyalty, or so the advertising agency would have us believe, the CEO wanted to know "What is the advertising worth?" No one in his right mind would try to answer that one, but being naive and having no real choice, McCann started.

Because of the large amounts of money involved in national prime time TV advertising there's a lot of attention paid to who pays what to whom. The advertising agency was able to report our brand's expenditures and also make good estimates of the expenses of the competitors. Brand share was also tracked carefully because many major retailers would stock brand leader and own brand only, greatly magnifying the consequences of a slip in share from the leading position.

A simple linear model based on an equilibrium concept led to being able to put numbers to the relative efficacies of the advertising of the various competitors; the advertising cost of market share. Combined with a knowledge of the manufacturing cost structures, it also showed some of the law of diminishing returns: you can have too much of a good thing, spending more on advertising than you get back in net revenues. It did require some assumptions that the marketing managers weren't too keen on: such as the idea that there was no real difference between some of the competing products! An extension to include dynamics gave a way of looking at how advertising campaigns might interact over time.

Next Step. You may want to look at the example of a way of looking at a market with a very different internal mode of communication, ethical pharmaceuticals.
If you have a problem evaluating your advertising spend or understanding the responses of the market to your efforts or you need a consultant with a different way of looking at your market, then contact me.

Other Experience
My experience with problems over these time scales is that people rarely expand their time horizons far enough to see the whole picture. Even if they try, they tend to miss interaction effects and think more in terms of extrapolating, sometimes with statistical models, from the recent past. My (MJMcC) observation is that the demographics and the compelling force of reality can be quantified to make a big improvement in perception. You only have to contact me to get help!

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Invitation. McCann can help if you have a design or operational problem that needs some technical support that is outside your team's experience, some quantitative assessment of what is really the cause of the difficulties, some design alternatives or just a fresh look by an intelligent interrogator.
If you have a problem with the behaviour of a market sector, plant, process or item of equipment and would like to get a quantitative handle on it to improve yield or optimise performance, then contact us. We are always ready to give a little time to discuss a new puzzle, in confidence, of course. We'll only worry about fees when we have some defined work. We can be flexible about how we work with you.
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Dr M.J.McCann,
POB 902,
Chadds Ford PA
19317 USA.
T: 1 302 654-2953
M: 1 302 377-1508
E: mjmccann@iee.org
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