Posted in Marketing and Strategy Terms, Total Reads: 577
Definition: Adaptive Control Method
A marketing manager first assembles information about consumers, their needs, and competitors in the market, advertising spends by the company, marketing channels available, production costs and marketing costs. He uses this information to find out how the market behaves in response to say a new product, a new promotion or advertising. Depending on his observations, he adjust his budgets, he may change advertising and packaging, or may modify the marketing mix. He then again measures the effect of his actions through measuring techniques like surveys, store audits and then tries out new actions.
The above process describes an adaptive method for controlling marketing activities. It is a set of mathematical/statistical tools to forecast, adapt and control the performance of a marketing system of the firm.
A marketing division of a company has certain objectives, for example, a target market share in a certain category (ITC may aim for 20% market share in deodorants for its Engage brand) or a certain volume of sales (1,00,000 Engage deodorant units to be sold in Western India region in the next quarter). Adaptive control methods help to forecast the sales volume through market research and then make changes to the marketing objectives to set more realistic goals. Thus, adaptive control methods help in pro-actively “adapting” or making changes as per the current performance.
For e.g. a company’s sales is a function of its advertising expenses. However the sales change by different amounts in response to advertising, depending on the stage of the advertising campaign. Initially sales may rise rapidly due to advertising, but as time progresses the sales flatten. Information about the sales response is collected from the market and then used to find out the optimal advertising expense for increase in sales. Thus, controlling and adapting the advertising expense for optimum increase in sales becomes possible.