Rediscovering an Old Master, John D.C. Little - ARF Insights

We had the pleasure of interviewing Lisa Wellington - Director Marketing Strategy & Insights, Productivity, The Coca-Cola Company. Wellington is an expert in marketing science and will be presenting a paper on how the seminal work of Dr. John DC Little can be applied to marketing mix modeling today.

ARF: Who is Dr. John D.C. Little? Can you briefly describe his modular approach to marketing mix modeling?

Wellington: Dr. Little is a professor of Marketing at MIT with a distinguished career spanning five decades. Considered a pioneer in marketing science, Little has done research on a broad set of modeling and decision support issues, including models of individual choice behavior, adaptive control of promotional spending, and marketing mix models for consumer packaged goods. He is a founding father of marketing mix modeling.

Dr. Little advocated a modular approach to marketing mix modeling, each module tackling one sub-set of drivers. Modules he explored included: advertising, price, distribution, trade promotion, consumer promotion, seasonality and trend.

ARF: How can we apply Dr. Little's approach to marketing mix modeling in 2012?

Wellington: In 1972 Dr. Little published "BrandAID: an online marketing mix model." Certainly, in the 40 years since data, statistical techniques and computing power have advanced considerably for consumer packaged goods marketing mix modeling. But so too has our marketing tool kit expanded, and routes to market continue to evolve. Data is still not good enough for one marketing mix model to be the answer to all our marketing ROI questions. The data is not granular enough, it is not comprehensive enough of different distribution channels; audience measurement is not comprehensive of our marketing actions. And so we need a combination of marketing mix models fed by Bayesian priors, conjoint studies, consumer surveys, and experiments to build an analysis that measures ROI of the majority of our marketing actions, business channels, brands and countries. The modular approach advocated by Dr. Little is conceptually still quite appropriate today.

ARF: How has Coca-Cola benefited from using this approach in global markets?

Wellington: What we get from our approach, even for countries or marketing levers with "poor" data, is good understanding of how and why and when and where marketing works, good direction on where invest next, and quantifiable impact on the business.

References
1. J.D.C. Little, "Models and Managers: The Concept of a Decision Calculus," Management Science, 16, B466-485 (April 1970)
2. J.D.C. Little, "BrandAID: An On-Line Marketing-Mix Model", 586-72, February 1972, Massachusetts Institute of Technology, Sloan School of Management Working Paper

Want to hear more? Lisa Wellington will be presenting at the ARF Re:think Convention on March 28. Registration is open.