Challenge
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Being faced with stiff competition in the airline industry and increasing fuel prices, this global airline needed a deeper understanding of the performance of their marketing budgets and how to position themselves in the marketplace.
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Given the long-term investment requirements of opening new flight routes it was even more important for this airline to understand the drivers of long-term consumer demand and how to support it with effective marketing.​
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The client specifically wanted to understand the impact of both internal and external drivers to determine the relative contribution of both brand and performance campaigns on short-term sales and long-term base growth.Â
Solution
- The Marketscience Base Dynamics modeling approach was leveraged within our Studio platform to identify the impact of internal and external drivers on flight bookings and revenue and determine the short-term and long-term ROI of marketing investment.
- A multi-hierarchical model structure was developed for the US market across four main departure regions, four sales channels and two seat classes.
- A number of intermediate and ultimate effects models were developed to identify and quantify the complex consumer journey of searching for and buying a flight ticket across online and offline touchpoints.​​
Results
- The client leveraged the optimization features of the Marketscience SimOpt tool to compare budgets that were optimized for short- versus long-term returns to understand the differences in channel allocations.
- To drive the relevant consumer perceptions supporting longer-term demand required an increase in social and online video investments as compared to prior short-term focused allocations.​
- +10% improvement in effectiveness due to long-term optimization.
Implementation
- The Marketscience team worked with various stakeholder groups across the business to socialize the results and help them incorporate recommendations into future marketing and media decision-making. Â
- The model structure was then evolved further to better integrate the impact of dynamic pricing and to glean insights on the interaction between marketing, brand strength and price elasticity.​
What We Did
- Dynamic Marketing Mix Modeling
- SimOpt.Studio Budget Optimization
