Methods and Applications in Marketing Management, Public Policy, and Litigation Support
Edited by Natalie Mizik and Dominique M. Hanssens
Chapter 21: Dynamic optimization for marketing budget allocation at Bayer
We present an Excel-based decision-support model that allows determining near-optimal marketing budgets and represents an innovative and feasible solution to the dynamic marketing allocation budget problem for multi-product, multi-country firms. 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. It was successfully implemented at Bayer, one of the world’s largest pharmaceutical and chemical firms. The profit improvement potential in this company was more than 50 percent and worth nearly €500 million in incremental discounted cash flows.
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