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Practice Prize Winner --Dynamic Marketing Budget Allocation Across Countries, Products, and Marketing Activities

Author

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  • Marc Fischer

    (University of Cologne, D-50923 Cologne, Germany)

  • Sönke Albers

    (Kühne Logistics University, 20457 Hamburg, Germany)

  • Nils Wagner

    (University of Passau, D-94032 Passau, Germany)

  • Monika Frie

    (Bayer Schering Pharma AG, Berlin, Germany)

Abstract

Previous research on marketing budget decisions has shown that profit improvement from better allocation across products or regions is much higher than from improving the overall budget. However, despite its high managerial relevance, contributions by marketing scholars are rare. In this paper, we introduce an innovative and feasible solution to the dynamic marketing budget allocation problem for multiproduct, multicountry firms. Specifically, our decision support model allows determining near-optimal marketing budgets at the country-product-marketing-activity level in an Excel-supported environment each year. The model accounts for marketing dynamics and a product's growth potential as well as for trade-offs with respect to marketing effectiveness and profit contribution. The model has been successfully implemented at Bayer, one the world's largest pharmaceutical and chemical firms. The profit improvement potential is more than 50% and worth nearly euro 500 million in incremental discounted cash flows.

Suggested Citation

  • Marc Fischer & Sönke Albers & Nils Wagner & Monika Frie, 2011. "Practice Prize Winner --Dynamic Marketing Budget Allocation Across Countries, Products, and Marketing Activities," Marketing Science, INFORMS, vol. 30(4), pages 568-585, July.
  • Handle: RePEc:inm:ormksc:v:30:y:2011:i:4:p:568-585
    DOI: 10.1287/mksc.1100.0627
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    References listed on IDEAS

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    Cited by:

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    3. Robert W. Palmatier & Andrew T. Crecelius, 2019. "The “first principles” of marketing strategy," AMS Review, Springer;Academy of Marketing Science, vol. 9(1), pages 5-26, June.
    4. Albers, Sönke, 2012. "Optimizable and implementable aggregate response modeling for marketing decision support," International Journal of Research in Marketing, Elsevier, vol. 29(2), pages 111-122.
    5. Marc Fischer, 2019. "Practice Prize Paper–Managing Advertising Campaigns for New Product Launches: An Application at Mercedes-Benz," Marketing Science, INFORMS, vol. 38(2), pages 343-359, March.
    6. Guitart, Ivan A. & Gonzalez, Jorge & Stremersch, Stefan, 2018. "Advertising non-premium products as if they were premium: The impact of advertising up on advertising elasticity and brand equity," International Journal of Research in Marketing, Elsevier, vol. 35(3), pages 471-489.
    7. Yuichi Takano & Nobuaki Ishii & Masaaki Muraki, 2017. "Multi-period resource allocation for estimating project costs in competitive bidding," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 25(2), pages 303-323, June.
    8. Ivan A. Guitart & Guillaume Hervet & Sarah Gelper, 2020. "Competitive advertising strategies for programmatic television," Journal of the Academy of Marketing Science, Springer, vol. 48(4), pages 753-775, July.
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    10. Yuri Peers & Harald J. van Heerde & Marnik G. Dekimpe, 2017. "Marketing Budget Allocation Across Countries: The Role of International Business Cycles," Marketing Science, INFORMS, vol. 36(5), pages 792-809, September.
    11. Yanwu Yang & Daniel Zeng & Yinghui Yang & Jie Zhang, 2015. "Optimal Budget Allocation Across Search Advertising Markets," INFORMS Journal on Computing, INFORMS, vol. 27(2), pages 285-300, May.
    12. Marc Fischer & Wolfgang Giehl & Tjark Freundt, 2011. "Managing Global Brand Investments at DHL," Interfaces, INFORMS, vol. 41(1), pages 35-50, February.
    13. Hamidreza Koosha & Amir Albadvi, 2020. "Allocation of marketing budgets to maximize customer equity," Operational Research, Springer, vol. 20(2), pages 561-583, June.
    14. Gary L. Lilien & John H. Roberts & Venkatesh Shankar, 2013. "Effective Marketing Science Applications: Insights from the ISMS-MSI Practice Prize Finalist Papers and Projects," Marketing Science, INFORMS, vol. 32(2), pages 229-245, March.
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    16. Hui Li & Qiaowei Shen & Yakov Bart, 2021. "Dynamic Resource Allocation on Multi-Category Two-Sided Platforms," Management Science, INFORMS, vol. 67(2), pages 984-1003, February.

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