Media Modeling and Budgeting at Dmi

7 Pages Posted: 30 May 2017

See all articles by Paul Farris

Paul Farris

University of Virginia - Darden School of Business

Phillip E. Pfeifer

University of Virginia - Darden School of Business

Abstract

A marketing director applies a scientific/quantitative approach to understanding and optimizing his company's marketing spending decisions. His hypotheses include the concepts of diminishing returns on spending, a results ceiling, carryover, and differential effectiveness. His team develops a mathematical formula that provides parameter estimates resulting from fitting the model to the three years of regional and national data. He must then decide how to apply the data to maximize media spending. A student Excel spreadsheet is available.

Excerpt

UVA-M-0791

Rev. Nov. 7, 2011

Media Modeling and Budgeting at DMI

Direct Marketing Insurance (DMI) was known worldwide for its scientific/quantitative approach to understanding and pricing auto insurance risks. Many people in the DMI organization thought this same approach might be useful in understanding and optimizing marketing spending decisions.

In three regions of the United States, DMI had assembled weekly data on media spending in five separate categories together with the number of prospects (potential customers requesting a quote either over the phone or using the web) the spending generated. There were a host of insights the company hoped a careful analysis of these data would provide.

Before turning the data over to the company's analysis group, DMI regional marketing manager Phil Phariso decided to articulate some strongly held hypotheses about the nature of the relationship between impressions and results. For the purposes of this analysis, Phariso declared that “results” meant getting people to request a quote for auto insurance by phone or Internet. Exhibit 1 lists the hypotheses Phariso and his group generated.

. . .

Keywords: marketing spend decision analysis data

Suggested Citation

Farris, Paul and Pfeifer, Phillip E., Media Modeling and Budgeting at Dmi. Darden Case No. UVA-M-0791. Available at SSRN: https://ssrn.com/abstract=2974678

Paul Farris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Phillip E. Pfeifer

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/Pfeifer.htm

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