In the last blog, I described the PITA Model that we were introduced to while at The Coca-Cola Company. A quick review of that blog will familiarize you with the PITA Model if it is new to you.
While at The Coca-Cola Company, I was introduced to a fairly straightforward approach to comparing markets and their potential. It was called the PITA Model. PITA is a method for breaking down sales into the components that are the real drivers of sales. I talk about this a lot and even brought it up in a recent conversation with Pedro Antonio Garcia Lopez that we included as another blog. I thought that I would do a quick overview for those who weren’t raised in the Coca-Cola System.
In a recent project, we were fairly overwhelmed by the complexity of a client’s trade promotions calendar. It contained numerous and varying discount rates that depended on a complex series of requirements, e.g. 2 for £4, 3 for £5, etc., at about seven items each week. Although the category is generally consistent, subsequent SKUs and types of occasions met made the portfolio very complicated. As you would probably expect from the typical Middlegame perspective on assortment opportunities in FMCG, we wanted to tackle the big issue of incrementality and transferred demand first. However, it was easy to get lost in the potential overlapping deals.
It is really amazing that almost 20 years have passed since the landmark article “Modeling Consumer Choice Among SKUs” by Peter S. Fader and Bruce G.S. Hardie in the Journal of Marketing Research (November, 1996). The following year, it was winner of the prestigious 1997 Paul E. Green Award for demonstrating the most potential to contribute to marketing research. If the judges from 1997 took a look at Middlegame, they would see that when the article is translated into the Multiplicative Competitive Interaction (MCI) framework of Cooper and Nakanishi, the entire foundation of Middlegame and its use of regular assessment of incrementality versus transferred demand is substantiated.
The Canadean Soft Drink Strategy Congress was recently held in Madrid. Pedro Antonio Garcia Lopez, our friend and partner at Itaca Alternative Consulting, was the chair of the event. Middlegame was eager to hear about the conference and Pedro Antonio agreed to give us a firsthand account of his observations and publish them in the blog. The following is an excerpt of that conversation.
During a recent presentation, I had to pause when I was asked what I meant by FMOT. I hadn’t really thought about it, but it had been more than a decade since Procter & Gamble first explained in 2005 how their strategies were targeted at winning the first moment of truth (FMOT) and the second moment of truth (SMOT). Since then, others have added the zero and third moments, but none are more important than the first. During this presentation, I realized that 2005 predated the careers of many audience members and I knew it was time for a refresher.
For those of us with a formal marketing education in the last century, the idea of the 4Ps was the first thing drilled into our lexicon. Thanks to E. Jerome McCarthy, whose textbook many of us had for Introduction to Marketing, we all can cite the 4Ps: Product, Price, Promotion and Place. About the same time that I was sitting in “Introduction to Marketing” in 1987, the availability of weekly scanner data to integrate advertising measurement started an analytics revolution named Marketing Mix Modeling (MMM).
While catching up with an old colleague last month, we each shared what we had been working on and swapped opinions on a number of business activities. As the conversation progressed, he suggested that what I was describing at Middlegame was an analytical solution for revenue growth management (RGM). I fully agreed.
In our last blog, we explained the core technology that drives the foresights that Middlegame provides: Competitive Interaction Analysis (CIA)®. During a recent conversation, one of our clients commented that CIA® was a clever way to uncover hidden “intelligence” for assortment, pricing, and merchandising issues. I didn’t want to spill the beans on all this great “spy versus spy” imagery for marketing analytics, but I came clean and told the real story.
A key element of marketing is understanding how to positively influence the sales of your brand and negatively (and ethically) influence the sales of your competitors. The idea stretches from developing positioning statements to studying choice behavior or even addressing KPIs through metrics like market share. The underlying theme is that the assessment of marketing effectiveness requires both the absolute and relative viewpoint.