An Investigation into the Evolution of Marketing-Mix Effectiveness: An Empirics-First Approach

Abstract

This study investigates how the effectiveness of three core marketing-mix instruments—price, assortment, and distribution—evolves over time across brands, categories, and countries, using the empirics-first approach to generate relevant knowledge. The authors analyze household panel data covering over 16,000 brands in 85 consumer packaged goods categories for on average ten years across 34 countries in Asia, Europe, North America and South America. They adopt a rolling-window estimation approach to derive time-varying elasticities, followed by a moderator analysis to identify systematic drivers of change. Averaged across time, brand price elasticity is −.640, assortment elasticity is .311, and distribution elasticity is .213. However, time-invariant averages have limited meaning given that 98.5% of brands exhibit significant evolution in at least one instrument's elasticity. Substantial heterogeneity in trends emerges, moderated by brand, category, and country factors. The single most important predictor is the brand's baseline (mean) elasticity. The stronger the elasticity, the larger its downward trend. Brand power and whether the brand is a local brand emerge as other key factors. Consumer purchase frequency and share of wallet are stronger category predictors of elasticity trajectories than retailer factors. Findings underscore the need for dynamic, elasticity-based resource allocation in brand management.