What is a feasibility study? Why including one can make your marketing mix project better

Introduction

When I worked in agencies there were times when certain features of a project went in and out of fashion. You did a thing; in time everyone did it. Then, no one did it when a new, shiny thing arrived. Now I am in charge - and a feasibility study is what I recommend to clients who have never used marketing mix modelling before. 

If something is feasible it means that it is possible to do easily or conveniently. In the context of advanced marketing analysis, it is a misnomer because these projects by their nature are complex. 

I prefer to position them as a route to manage risk by understanding what you will and will not get out before you put all the money in. 

What is a feasibility study?

Here is a broad definition from Investopedia that sums up the main elements quite well. It is quite general though and I want to be more specific about what this might look like for a potential marketing mix modelling project.

If you are talking to a prospective partner about marketing mix modelling it has probably already been established that it is: 

• Theoretically possible with the data you have.
• An appropriate solution for your business questions.
• They have the necessary credentials to do it.

If you have not covered that ground yet but you are already thinking of committing it may be wise to pause for just a second. I wrote this to help businesses find the right modelling partner. Carry on if you are sure that you made the right choice. 

The aim of a feasibility study for marketing mix modelling is not a proof of concept. It is a test drive using your specific business data so that everyone is clearer about: 

• How tricky it may turn out to be, which (should) affect cost and timing.
• If there are questions that cannot be answered at all.
• What the most effective project design is.

There is no reason that this ground cannot be covered once a project has begun. But in my experience things tend to run more smoothly if time is taken at the outset to answer the questions above. From my perspective as a service provider, projects are way better with fewer surprises for either party down the line. 

The main benefit for businesses is to reduce the risk of shelling out thousands for a service that turns out not to deliver what you need it to. But there is also a golden opportunity for you to get to know your partner and how they work. By engaging early, you can also help shape the project design. 

What is involved?

Almost all approaches involve collecting some of the data that will be needed in a full project. The technique that marketing mix modelling relies on needs variation in data. A good study will include charts and summary statistics that explore this. 

Your business questions will be reviewed against the data to find out if there are any that must be marked impossible. There is no cast iron guarantee that every other question will be answerable but better to know early if a key one is a non-starter. 

The project scope may also be a bit fluid and that can be worrying for some clients. But the feasibility study can also be used to look at various options and what the implications are for cost, timing, and outputs. A firm scope is best for both parties. 

What are the outputs? 

These will vary by service provider, but this is what I typically do:

1. Summary about the quantity of data – highlighting possible issues.
2. Summary about the quality of data – highlighting gaps.
3. Summary about the variation within the data – what this means for questions.
4. Correlations of key inputs versus KPIs – to give an indication of relationships.
5. My personal ‘go/no go’ recommendation based on the above.

How do I use it?

I encourage my clients to review the report and conduct their own ‘go/no go recommendation.’ If we are aligned the next step is to decide on a firm scope, which tends to be a whole lot easier it if some options were explored during a feasibility. 

This is also a great chance for clients who have not involved a wider team to get more people bought into the concept and generating ideas. It is too late if these people are only invited to the debrief to find out that their big issue is not covered. 

Use it to size up a partner – can you work well with them? But seriously, press the kill switch if it will not give you what you need and you know already it will never be used. Most good consultants hate and sense pointless work, even if they are paid. 

Wrapping it up

I do not do feasibility studies for free because there is a fair bit of work involved. But you have probably appreciated that it also means that at least some of the data collection and groundwork are done and I reflect that in the remaining fees. Fair dos. 

Neither do I insist on them if clients are au fait with marketing mix modelling or I have a ton of modelling experience in their category and so already have a solid idea of what works and how easily and conveniently the answers will come.

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© Jo Gordon Consulting Ltd 2021