Practice Prize Paper–Managing Advertising Campaigns for New Product Launches: An Application at Mercedes-Benz

The launch of a new product is one of the most critical activities that product and brand managers are faced with. It requires a substantial communications budget to introduce the new product to the market. As the number of media channels proliferates, however, managers are increasingly held accountable to demonstrate the efficient use of resources. This article introduces a new decision support tool to optimize advertising campaigns for new product launches based on lessons learned from an ex post analysis of prior campaigns. The tool builds on a distinct data collection approach combined with econometric modeling to produce advertising elasticities, which is the key information in the media mix optimization. The approach was implemented at Mercedes-Benz and applied to four major new car launches in Germany in 2012 and 2013. It revealed estimated savings of 15%–30% or EUR 2 million per campaign from a more efficient use of resources.

Data files and the online appendix are available at https://doi.org/10.1287/mksc.2018.1136.