Optimizing Global Portfolio and Channel Investment and Allocation Decisions
Gaining share and driving profitable growth in a world that has truly gone global has never been more challenging for organizations. Brands are increasingly under siege on multiple fronts. Imagine a scenario where “the sky is falling” while at the same time the ground rises to meet it. Brands operating in a “business as usual” mode are being pressured for profitable growth like never before. With more media venues, increasingly brand-fickle consumers and omnipresent and expanding competition worldwide the need to maximize brand investment is paramount. Companies that invest as if it were yesterday will pay dearly in this environment.
Today’s business climate requires companies to think and act differently. Only a few years ago executives could afford to talk globally even though the talk didn’t necessarily translate into action. No longer. Too often, the larger and more traditional markets and brands continue to get the lion's share of funding. These allocations, if they change, change only marginally, usually increasing year-over-year. Too often margins are not increasing to match the level of investment.Newer growth markets, particularly large ones such as China, India and emerging Europe, have been the beneficiaries of incremental funding based on market potential. As a result, over time a range of large global investments were established, largely on a country-by-country basis.
But with slower growth in many countries, CEOs, CFOs and CMOs are facing more difficult investment decisions and the need to re-evaluate their global investment portfolio to drive share and profits. Rather than continuing to optimize existing media allocation levels on a country-by-country basis, what if you could start over, identifying the "right” investment levels based on the potential of each country and the brands within it? What if those "right” investment levels showed that many countries could achieve the same or even higher market share and growth with less investment; and that other countries could substantially increase those levels with more investment?
In conducting interviews with more than 20 leading consumer product companies, it is clear that the misallocation of marketing dollars across countries is endemic. In fact, it is estimated that as much as a third of existing global budgets may be either significantly over or under-invested. That means for every $1 billion in marketing investment today, more than $300 million could be reallocated to support revenue, share and innovation efforts. Imagine the possibilities…
The Solution… While many companies currently do robust work in the area of media and marketing mix optimization and pricing, too often the overall investment levels for the categories and brands start out at the wrong levels. A portfolio solution enables companies to get the investment levels right at the country and category/brand levels first, thereby creating a more optimal set of investment scenarios.
MMA has taken a leadership role in seeking to help companies solve for their country, category and brand level investment challenges. By collecting, cleansing and harmonizing global consumer market research, media, sales and promotion, econometric, demographic, cultural and country/consumer level data and creating predictive models, MMA sets the stage to create significant and measurable incremental value for its clients, answering critical questions asked in board rooms every day:
1.) How should I allocate my investment budget to optimally drive global share and profitable growth?
2.) Which categories and brands are positioned for future growth and/or declines, and in which countries?
3.) How can I capitalize on emerging opportunities while managing the risk associated with declining categories and unstable markets?
4.) Which countries and brands should I allocate more/less investment to? How much?
5.) What will be the direct impact of my reinvestment decisions on my global share and profits?
MMA’s approach utilizes a combination of holistic data collection and management, forward-looking, innovative modeling and technology-driven automation.
Our approach involves four distinct steps:
1.) Development of a market opportunity forecast for each category/country combination
2.) Combination of the forecast with market share models to provide a basis for simulation and optimization
3.) Creation of optimization and simulation routines in order to develop reallocation insights into how to reapportion investment budgets to maximize share and revenue growth
4.) Links to client business processes with dynamic planning and projection capabilities enabling course correction and ongoing portfolio management
The Portfolio Optimization Solution enables companies to optimize investment decision-making on several levels:
1.) Global Portfolio Optimization enables companies to optimize share, revenue and investment across multiple countries, categories and brands.
2.) Country Portfolio Optimization enables companies to optimize share, revenue and investment across regions and markets within a country.
3.) Channel Optimization enables companies to optimize investment decisions related to various channels, i.e., grocery, drug, mass merchandisers, convenience stores, bodegas, department stores, etc.