“Dynamic Marketing Budget Allocation across Countries, Products, and Marketing Activities at Bayer” by Marc Fischer (University of Passau), Sönke Albers (Chrisitan-Albrechts University) and Niles Wagner (University of Passau).
The authors report on the development of an innovative solution to the dynamic marketing allocation budget problem for multi-product, multi-country firms. Their decision support model determines near-optimal marketing budgets at the country-product-marketing-activity level in an Excel-supported environment each year. 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. The model has been successfully implemented at Bayer, one the world’s largest firms in the pharmaceutical and chemical business, leading to an organizational transformation and a dramatic reallocation of resources, leading to a profit improvement of $685million in a $4billion unit at Bayer.