Prize-Winning Budgeting Model Aims for More Effective Marketing Spending

COLOGNE, GERMANY, June 18. 2010 - The 2009-2010 INFORMS Society for Marketing Science/Marketing Science Institute (ISMS-MSI) Practice Prize was presented today to professors at the University of Passau and the University at Kiel for research that supported Bayer Healthcare AG in their marketing investment planning for the primary care business of the company’s pharmaceutical product portfolio in five European markets. The prize-winning budgeting model aims for more effective marketing spending.

The prize was awarded to Marc Fischer of the University of Passau, along with Sönke Albers at the Christian-Albrechts-University, Kiel, Nils Wagner at the University of Passau und Monika Frie at Bayer Healthcare for outstanding development and implementation of marketing science concepts and methods. The paper is entitled, “Dynamic Marketing Budget Allocation across Countries, Products, and Marketing Activities.”

The ceremony took place at the MARITIM Hotel & Convention Center in Cologne, Germany. The 32^nd INFORMS Marketing Science Conference, hosted by the Marketing Area of the University of Cologne, began on June 17 and continues through June 19 at the MARITIM Hotel & Convention Center.

The winning research provides an innovative solution to what is called “the dynamic marketing allocation budget problem” for multi-product, multi-country firms like Bayer HealthCare AG. The decision-support model allowed Bayer to optimize annual marketing budgets across selected country-product-activity cluster level in a Microsoft Excel-supported environment. The model takes into account marketing dynamics and a product’s growth potential, as well as tradeoffs of marketing effectiveness and profit contribution.

The other finalists in the competition were:

• John Roberts, Australian National University and London Business School; Ken Roberts and Alan Simpson, both of Forethought Research; and Peter Danaher, Melbourne Business School, for “Jetstar: Driving the Brand”
• Joep Arts, VU University Amsterdam; Koen Pauwels, Ozyegin University and Dartmouth College; and Thorsten Wiesel, University of Groningen, for “Marketing’s Profit Impact: Quantifying Online and Offline Funnel Progression”
• V. Kumar and Denish Shah, both of Georgia State University; and Jac Herschler, Prudential, for “Uncovering Implicit Customer Needs for Determining Explicit Product Positioning: Growing Prudential Annuities’ Variable Annuity Sales”

 Papers based on these outstanding implementations of marketing science will appear in a forthcoming issue of the INFORMS journal Marketing Science. Videos of these (and finalists and winners in previous competitions) are available at http://techtv.mit.edu/collections/isms.

The award decision was made at the INFORMS Society for Marketing Science /Marketing Science Institute/ (MSI/ISMS) Marketing Science Practice Conference, hosted by the Massachusetts Institute of Technology, January 15-16. The Practice Prize Committee was chaired by Russell Winer, New York University, and included Rafael Alcaraz, Hershey Foods; MSI Executive Director Ruth N. Bolton; Eric Bradlow, Wharton School and Editor, Marketing Science; Gary L. Lilien, Penn State and EMAC Representative; Venkatesh Shankar, Texas A&M; and Robert Woodard, Campbell Soup.

At today’s conference, the MSI/ISMS Practice Prize was officially renamed in honor of Prof. Gary L. Lilien. Prof. Lilien is Distinguished Research Professor of Management Science and Research Director of the Institute for the Study of Business Markets at Penn State. Professor Lilien, a world renowned expert in marketing analytics and former President of The Institute for Management Sciences (the parent organization of INFORMS), founded the Practice Prize Competition in 2003 and has championed its growth and development ever since.

About INFORMS

The Institute for Operations Research and the Management Sciences (INFORMS^®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.