Before you attempt any modelling you should first look at the inputs and outputs that you want to go in to your modelling. Here is the matrix:
What you need to do is to make a laundry list of the variables (inputs) that affect the output. Typically in a marketing company one would look at sales as the output and a whole lot of variables as inputs. Let me look at a few examples for these cells.
1. Measurable-Controllable Variables
GRPs of your brand through TV advertising are measurable and controllable.
2. Measurable-Not-Controllable
Inflation is measurable but not controllable
3. Not-measurable – Not Controllable
The amount of investments made by your competition in dealer incentives is neither easy to measure accurately nor can you have any control. But this activity impacts the sales of your brand.
4. Not Measurable-Controllable
Not measurable generally refers to qualitative issues which are quite often measured by a pseudo variable, for example: Quality of your salesperson.
In your business environment if the majority of your input variables are in Cells 1 and 2, and you feel that these make a big impact, then modelling will be successful. If not, and many variables are in Cells 3 and 4, modelling will not be a success.
Most companies do not undertake this simple preliminary exercise of classifying the variables that impact their business and then hit potholes throughout the design testing and implementation.
Unclassified variables are veritable landmines. Watch out for them.
Dr. Cooram Ramacharlu Sridhar (Doc)
Techaisle
