Calpol - Using Econometrics to Predict the Future

UM for Johnson & Johnson

 

In 2016, Calpol was flying high - the Kids’ Meds category leader with 33.2% share and healthy growth of 1.1pts YOY. The combined challenges of increased competition from private label and parents either trading down, treating less or dropping out of the category altogether, made maintaining share across the winter 17/18 season a challenge. We shifted our mind-set from a pure focus on ROI, to balancing ROI with Retail Sales Value (RSV), which is essentially the cash that goes through the till. RSV is a valuable metric to Calpol because it allows us to get closer to business metrics such as share performance. ROI was still important but it was a matter of balancing the two.

Through econometric modelling we established a new way of interpreting the data using both a simulator and a real-time econometrics engine. The former let us forecast both ROI and RSV for any given TV plan. The latter gave us a two-week rolling forecast to inform media weights in flexible, supporting channels.

We didn’t just achieve our goal of maintaining market share, we increased value share in the Kids’ Meds category, with the increase equal to over £1M RSV.

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