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Market Mix For

ElecKart is an e-
Modelling commerce
Project Flow
Business Understanding Data Understanding Data Preparation
• Objective • Data uploading • Select Relevant data
• Background Business • Describe Data • Integrate the Data
Understanding • Understanding level of data • Clean the Data
• Problem Statement • Data Quality Check • Construct the Data
• Data Cleaning • Format Data
• Understanding Data type

Model building
Linear Model (Mid submission)
Deployment Multiplicative Model
Keyock
Distributed lag
Hierarchical
Objective

To be able to deliver better


To manage brands as a value through enhanced
transformed marketplace media and channel
experience

To be able to leverage cutting


To best allocate human and
edge research tools and new
other resources for marketing
sources of information to stay
activities
ahead of competition
ElecKart is an e-commerce firm specialising in electronic products. Over the last one
year, they had spent a significant amount of money in marketing. Occasionally, they
had also offered big-ticket promotions (similar to the Big Billion Day). The CFO feels
that the money spent over last 12 months on marketing was not sufficiently impactful :

To manage brands as a transformed marketplace

Background To be able to deliver better value through enhanced media and channel experience

To best allocate human and other resources for marketing activities

To be able to leverage cutting edge research tools and new sources of information to
stay ahead of competition
Problem • How to optimize spending on commercials, online
campaigns, and pricing & promotion ?
Statement
Data Description

Order Level Data


• FSN ID: The unique identification of each SKU
• Order Date: Date on which the order was placed
• Order ID: The unique identification number of each order
• Order item ID: different products under the same order generates different order Item IDs
• GMV: Gross Merchandise Value or Revenue
• Units: Number of units of the specific product sold
• Order payment type: How the order was paid – prepaid or cash on delivery
• SLA: Number of days it typically takes to deliver the product
• Cust id: Unique identification of a customer
• Product MRP: Maximum retail price of the product
• Product procurement SLA: Time typically taken to procure the product

Other Data
• Monthly spends on various advertising channels
• Days when there was any special sale
• Monthly NPS score – this may work as a proxy to ‘voice of customer’

As per the instruction data used from July 2015 to June 2016.
Data type of columns looked at and modified as per the need

Relevant columns were picked up ignoring the outliers

Data Presence of missing values were looked at and were ignored


Cleaning
After the basic cleansing process of sales, media, NPS score data, their missing values
assessment was done

The entire data was looked at from weekly perspective


To develop a market mix model to observe the actual
impact of different marketing variables over the last year
and built model with potential market driver to generate
maximum impact in sales so that ElecCart can Optimizely
use the marketing budget in future.

Analytics Solution
Data has been provided in the following
files which has been uploaded in the R
project for analytics.

ConsumerElectronics.csv

Data Loading
Media data and other information.xlsx

Product Details.docx
Since 80% of the variable
Filter out dates which are has 'No Expected
Rows containing NA are
not in July 2015 and June delay'(\\N) will assume
removed(as only .3%)
2016 these scenarios as zero
delay.

“GMV =List_Price* Unit”


has been used to derive

Data Convert order id and order


item id from scientific
Negative customer ID,PIN
converted into positive
considering data entry
the value of GMV
wherever it is GMV is zero
but MRP is a positive

Preparation notation to integer


errors
number, the equation also
applied to find MRP where
GMV is a positive value but
MRP is not available.

Create three dataframes


Converted Monthly data
To understand special sales for each of the product
into daily and
days, fetch the week sub-categories i.e, Camera
subsequently aggregated
number for holiday list accessory, Home audio and
to week.
Gaming accessory
AdStock

Assume Memory Coefffcient is Creating the adstock for each


50% media investment
• For this capstone project we
limit our model building
Data load focus to camera_accessory,
Home_audio and
Gaming_accessory product
sub-categories.
• For simplicity will start
Linear model building with
numerical features, later will
consider categorical
features.
Weekly aggregrated data is at granularity
of product_sub_category, For Exploratory
analysis, will collapse
product_sub_category level weekly data.

EDA
Will start analyzing the weekly Gross
Merchandize Value the online website
generating in sales.
• GMV, Product_mrp are in terms of INR, while marketing
spend recorded in INR Cr. Lets convert marketing spend to
INR. While models won’t be sensitive to these parity in
units, but for easy of model explanation, will standadize
units.

Unit Scalling
Performance driver analysis

Which among these


drivers could be
Which KPIs drive the
controlled by internal
top line performance?
influence and which are
external to our control?
KPIs
• week • nps • Radio_adstock
• gmv • total_order • Other_adstock
• units • online_order_perc • special_sale_week
• online_order • TV_adstock
• offline_order • Digital_adstock
• sla • Sponsorship_adstock
• product_mrp • Content.Marketing_adstock
• product_procurement_sla • Online.marketing_adstock
• list_price • Affiliates_adstock
• discount • SEM_adstock
Effect of market leavers on sale of Camera Accessories-1
• 0-17th week promotional activity shows a very
little or no impact on sales , most of the time
GMV is either below 25th percentile or above 75
percentile, that’s why we may consider this data
as outlier.
• Week 18 through rest of the year there is a
stable pattern of sales and increase of sales
during promotional period is evident.

• Sales volume increases with the promotion


• Most of the unit sold offline
• Promotion boast offline sale rather than online
Effect of market leavers on sale of Camera Accessories-2
• SLA is always greater than procurement
• Discount given throughout the year SLA ,which is good as there is always
• More discount observed on non promotional buffer margin.
weeks
• Most of the time NPS is higher in non
promotional week, this may be a
concern of inferior delivery or quality
during promotional week.
Effect of market leavers on sale of Home audio-1
• 0-17th week promotional activity shows a very
little or no impact on sales , most of the time
GMV is either below 25th percentile or above 75
percentile, that’s why we may consider this data
as outlier.
• Week 18 through rest of the year there is a
stable pattern of sales and increase of sales
during promotional period is evident.

• Sales volume increases with the promotion


• Most of the unit sold offline
• Promotion boast offline sale rather than online
Effect of market leavers on sale of Home audio-2

• SLA is always greater than procurement SLA ,which is


good as there is always buffer margin.

• Most of the time NPS is higher in non promotional


week, this may be a concern of inferior delivery or
quality during promotional week.
Effect of market leavers on sale of Gaming accessories-1
• 0-17th week promotional activity shows a very
little or no impact on sales , most of the time
GMV is either below 25th percentile or above 75
percentile, that’s why we may consider this data
as outlier.
• Week 18 through rest of the year there is a
stable pattern of sales and increase of sales
during promotional period is evident.

• Sales volume increases with the promotion


• Most of the unit sold offline
• Promotion boast offline sale rather than online
Effect of market leavers on sale of Gaming accessories-2

• SLA is always greater than procurement SLA ,which is


good as there is always buffer margin.

• Most of the time NPS is higher in non promotional


week, this may be a concern of inferior delivery or
quality during promotional week.
AdStock in different media for camera
Retail Price Inflation

Home Audio
Camera and Accessories

Gaming Accessories
Correlation of
different Market
levers for Camera
and Accessories
Correlation of
different
Market levers
Home Audio
Correlation of
different Market
levers Gaming
Accessories
Model Evaluation for Camera and Accessories
Model Significant Variables Adjusted R2 Error(RSE) Remarks • Adjusted R2 is the
Linear Models nps + Digital_adstock + 47% 1822000 Adj.R2 is moderate but error is too high, performance of the model
Sponsorship_adstock we will not select this model on training data
Multiplicative discount + 74% 1.077 Adj.R2 is good, RSE also is less. We are • More the Adj.R2 better the
Model Content.Marketing_adstock selecting this model. model is.
+ Online.marketing_adstock • RSE is the measurement of
Koyck Model nps + Sponsorship_adstock + 45% .74 Though RSE is less but Adj.R2 is error
SEM_adstock moderate or less, hence we are not
selecting this model.
Distributive Digital_adstock + 40% .77 Though RSE is less but Adj.R2 is
Model Sponsorship_adstock + moderate or less, hence we are not
list_price_ma selecting this model.

Distributive nps + online_order_perc + 79% .93 Adj.R2 is good, RSE also is less.We are
Multiplicative discount1, selecting this model.
Model

Based on the adjusted R2 and RSE We have shortlisted Multiplicative Model and Distributive Multiplicative Model
Camera and accessories Elasticity
• The figures are indicating elasticity of a variable with
respect to overall sales.
• Increasing the spent on the KPIs which have positive
elasticity would increase the sales, hence more fund shall
be allocated for those KPIs.
• As per the Multiplicative model Online marketing shall be
given priority while as per the Distributive Multiplicative
model Discount will have a positive effect on sales in the
subsequent week.
• Hence budget shall be focussed on increasing spent on
online marketing and discount.
Model Evaluation for Home Audio
Model Significant Variables Adjusted R2 Error(RSE) Remarks • Adjusted R2 is the
Linear Models discount + 44% 2131000 Adj.R2 is moderate but error is too high, performance of the model
Sponsorship_adstock + we will not select this model on training data
special_sale_week • More the Adj.R2 better the
Multiplicative discount + 71% .66 Adj.R2 is good, RSE also is less. We are model is.
Model Content.Marketing_adstock selecting this model. • RSE is the measurement of
+ Online.marketing_adstock
error
Koyck Model nps + Sponsorship_adstock + 52% .697 Though RSE is less but Adj.R2 is
SEM_adstock moderate or less, hence we are not
selecting this model.
Distributive Digital_adstock + 49% .71 Though RSE is less but Adj.R2 is
Model Sponsorship_adstock + moderate or less, hence we are not
list_price_ma selecting this model.

Distributive nps + online_order_perc + 80% .52 Adj.R2 is good, RSE also is less.We are
Multiplicative discount1, selecting this model.
Model
Based on the adjusted R2 and RSE We have shortlisted Multiplicative Model and Distributive Multiplicative Model
Home Audio Model evaluation Elasticity
• The figures are indicating elasticity of a variable with
respect to overall sales.
• Increasing the spent on the KPIs which have positive
elasticity would increase the sales, hence more fund shall
be allocated for those KPIs.
• As per the Multiplicative model TV advertisement shall be
given priority while as per the Distributive Multiplicative
model Sponsorship will have a positive effect on sales.
• Hence budget shall be focussed on increasing spent on
TV Advertisement and Sponsorship.
Model Evaluation for Gaming
Model Significant Variables Adjusted R2 Error(RSE) Remarks • Adjusted R2 is the
Linear Models discount + 49% 1038000 Adj.R2 is moderate but error is too high, performance of the model
Sponsorship_adstock + we will not select this model on training data
special_sale_week • More the Adj.R2 better the
Multiplicative discount + 82% .82 Adj.R2 is good, RSE also is less. We are model is.
Model Content.Marketing_adstock selecting this model. • RSE is the measurement of
+ Online.marketing_adstock
error
Koyck Model nps + Sponsorship_adstock + 51% .73 Though RSE is less but Adj.R2 is
SEM_adstock moderate or less, hence we are not
selecting this model.
Distributive Digital_adstock + 52% .68 Though RSE is less but Adj.R2 is
Model Sponsorship_adstock + moderate or less, hence we are not
list_price_ma selecting this model.

Distributive nps + online_order_perc + 79% .87 Adj.R2 is good, RSE also is less.We are
Multiplicative discount1, selecting this model.
Model
Based on the adjusted R2 and RSE We have shortlisted Multiplicative Model and Distributive Multiplicative Model
Gaming accessories Model evaluation
Elasticity • The figures are indicating elasticity of a
variable with respect to overall sales.
• Increasing the spent on the KPIs which have
positive elasticity would increase the sales,
hence more fund shall be allocated for those
KPIs.
• As per the Multiplicative model Online
Marketing and sponsorship shall be given
priority .
• Hence budget shall be focussed on
increasing spent on Online Marketing and
Sponsorship.