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The smoking chimney: a new
approach to modelling
Doug Edmonds,Tortilla 71 and Mark Brown,The Marketing Store,
describe the development and implications of a new modelling technique
AVINGTAKEN a new approach to
H modelling based on what we have
experienced by observing nature,
we have arrived at an interesting approach
to modelling that produces easily action-
able and interpretable results.
The trouble with articles
about models
If modelling is seen as irrelevant and
boring by the marketing and research
community at large, how do they per-
ceive an article about modelling? We
won’t answer that question here, but we
hope we can offer a fresh perspective on
the modelling debate. In particular, we
hope to spur modellers on to bring their
wares out of the back room and on to
the boardroom table.
The trouble with models
Modelling is the furthest activity from
most brand managers’ minds. To be a
good brand manager does not require
one to be good at numerical analysis.
What makes a good foot soldier is differ-
ent from what makes a good general.
Consequently, the downfall of most
sales models is that they cannot easily be
understood by the numerical layman.
Herein lies the problem. Most models
are developed for the modelling
community. They approach the whole
process of analysing effectiveness from
the point of view of someone, the mod-
eller, who has excellent numerical and
analytical skills. In itself this is a funda-
mental problem.
As Schulz and Meer wrote in Sep-
tember’s Admap (1), there are some
principles every modeller should follow
in order to be able to communicate to a
broader audience:
● Transparency.
● Simplicity.
March 2001
● Causal factors are not abstract.
● Intelligibility.
We have always been interested in
models but not in the minutiae of them.
We aim to demonstrate a new model
that has been developed with brand
management in mind. We begin our
story, as many inventors have done
before, with a random walk. A stroll
that is possibly more interesting than
the model.
Our random walk marries the unlikely
bedfellows of smoking chimneys and
marketing.
EXHIBIT 1
The smoking chimney
Chimneys
We have spent many hours watching
smoking chimneys spewing out their
fumes. As students of gas and fluid
mechanics in earlier incarnations, we
realised that there might be a valid link
to marketing and research.
When a column of hot gas exits a
chimney or smokestack, and enters a
static volume of air, several interesting
things happen. At the edge of the rising
column of smoke the air surrounding it
is still.The difference in speed between
the moving smoke and the still air starts
a physical process. (Students of fluid
Admap
© World Advertising Research Center 2001
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mechanics would call this process
entrainment, but the name isn’t impor-
tant.) The rising smoke causes the still
air to move, by the process of friction. As
the air starts to rise it is drawn into the
smoke. As it is drawn into the smoke it
mixes with it and cools down. The
cooled smoke then slows down. At the
same time it begins to roll outwards
away from the centre of the column,
causing it to thicken (Exhibit 1).
This sounds nice but what does it
mean to you? To answer this required a
lateral jump.
The lateral jump from chimneys
to marketing
For us, the lateral jump came by putting
this effect witnessed in nature in the
context of a brand’s sales curve.
From years of developing and attempt-
ing to evaluate various forms of marketing
activity, one thing is certain: whether it is
advertising, new products, sales promo-
tion, price-cutting, off-shelf display or any
other interaction we can create between
brands and consumers, the results are
unpredictable.This is not to say that we
cannot get close to estimating a volu-
metric effect, but this is usually based on
past experience. Quite what happens and
why may be a mystery.
This is because there is not a linear
relationship between marketing activity
and consumer response. This led us to
think that there may be a ‘critical mass
effect’, whereby activity needs to be of a
certain scale to jump to a new level of
effectiveness. The trouble is that this is
not true. Some small-scale activity can
be highly effective.
So we began to think of the effect as a
series of small eddies, which sometimes
come together to create bigger ones and
sometimes cancel each other out. This
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EXHIBIT 2
Raw sales data for an fmcg brand in its seventh year
seems to make sense, because it may help
to explain the effect of ‘word of mouth’.A
particularly relevant price promotion in a
particular store may get talked about
among friends, which could have the
unexpected effect of increasing store
traffic. An ad campaign for a beer with
a couple of frogs in it may get talked
about in the pub or the playground, pre-
conditioning TV viewers for their next
viewing, thereby increasing awareness
scores among the target market and
unexpectedly creating a playground fad.
If we take this principle and assume
that the proximity of the consumer to
the activity affects the warmth of the
relationship to the brand, we can picture
whirlpools with strong brand advocates
in the middle, slowing to brand accep-
tors at the edges.
Like all good analogies ours is less
than perfect. It does, however, provide a
springboard for defining what gives a
sales curve (for an fmcg brand) its shape.
When a brand is launched it attracts a
group of users.These stay as hot users –
or, if their demand for the product is
cooled, they become less warm to the
brand. In the extreme instance they may
even stop buying the brand. Moving this
analogy on helped us refine how to
construct the conceptual model.
Turning on the taps
Imagine we can apply heat to our smoke
plume at any point, with any intensity we
wish. Heat it very intensely over a short
period and it becomes more turbulent,
and draws in more still air, causing it to
cool quickly. Similarly, if we heat it gently
2 Admap
over a long period, it heats more slowly.
The smoke column will draw in air at a
lesser rate – and cool at a lesser rate.
It does not take an enormous leap of
imagination to see these that effects relate
to promotions and advertising, and their
subsequent effects on a brand’s sales.
Increasing demand for a brand quick-
ly is the effect of a price promotion or a
viral campaign. Slowly increasing the
demand for a brand over a longer period
is the effect of a piece of communications
– what used to be called advertising.
An epiphany?
Not an epiphany as such. We realised,
though, that if we looked at consumers in
the context of this modelling approach
we could account for the effect of pro-
motions in the same way that we could
EXHIBIT 3
Creating a numerical model from the sales data
© World Advertising Research Center 2001
account for the effect of advertising. In
short, because both effects modulate
consumers’ behaviour in a similar fash-
ion, but on a different timescale, we
could isolate one effect from the other
with relative ease.
It all sounds good, but does it work?
What is this model about and what does
it hope to do?
The conceptual model
This model is based on behaviours. In
essence, the modelling process begins
with identifying a brand’s individual
buyer’s behaviour. Once a sales curve has
been converted into a series of different
buyer curves, the second phase of model-
ling begins. Arguably, this is the more
complex and time-consuming phase, as it
involves modelling the changes in the
buyer groups’ size in the face of commu-
nications and promotions.
To repeat ourselves, we can overlay the
effect of both communications and pro-
motions on to the model because we are
dealing with people. It might sound odd,
but people are easier to model than
abstract concepts like advertising and
brand awareness.This modelling process
is based on the assumption that distrib-
ution remains constant. If this is not the
case, then things become a little more
complex, but still achievable.
The benefits of the conceptual model
Like other modellers, we would love to
be able to predict sales curves of brands
with the minimum error. However, to
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EXHIBIT 4
Converting the sales data curves into popualtions
achieve this with any model means being
able to incorporate changes in sales that
are dramatically removed from the
underlying base sales. It is these spikes
and troughs that cause most models to
fall down when trying to predict them.
Whether our model can achieve such
accuracy in every case remains to be
proven. We believe that there is merit
and consumer insight to be drawn from
first being able to create a model for the
underlying sales.The immediate benefits
of a model that can get close to replicat-
ing base sales are three-fold:
● Broad consumer behaviour. The model
paints a picture of the broad behaviour of
the buyers of a brand. This can be as
informative to the brand owner as being
able to determine the relative effectiveness
of promotions vs other communications.
● Indication of the effect of long-term strat-
egy. Using this technique it is possible to
evaluate the efficacy of a strategy in terms
of changing the profile of a brand’s buyer
groups over a period of time.
● Project, over time, the base-level sales.
Once we have created a model for base-
level sales founded on groups of people,
it is then possible to use the curves
representing the populations to predict
behaviour and sales in the future.
In generating and creating this
approach to modelling we have come to
the belief that the downfall of many
models is the urge to try and replicate
real life to two decimal places.While we
hope that one day our model will be able
March 2001
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to do this, we are developing it primarily
to provide, at least, transparent results to
the marketing team.
At this stage we need to bring the
model to life with an example.This is a
little more complicated, so we have
skipped some technical details to give a
taster, rather than a complete meal.
An example
To demonstrate our model in practice
we have chosen to show how we would
create a model for an fmcg brand in its
seventh year of existence. Exhibit 2
shows the raw sales data that we were
given to construct the model.
As outlined above, the first step is to
EXHIBIT 5
Improved correlation model (achieved by allowing for population fluctuations)
Admap
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take the sales curve and create a numer-
ical model for it. At this point we are not
interested in awareness, media spends,
promotional activity or distribution.We
just want to be able to create a curve that
has a similar shape to the sales curve,
using a known set of equations. The
results from this are shown in Exhibit 3.
To move into the next phase of mod-
elling we make our first assumption: the
different curves we use to create the
model replicate the value contributions
of heavy, medium and light brand buy-
ers. Using buyer data we can convert
these curves to populations. In doing
this we arrive at the bedrock of the
model. No longer are we operating in
abstract realms of awareness and saliency
but in the realms of people.This calcu-
lation gives us the curves shown in
Exhibit 4.
These consumer groups are based on
a modelled sales curve that is actually
relatively poor. To improve it we must
cater for the effects of promotions and
advertising. Because we are dealing with
people, we can have a much firmer idea
of how different groups will react to pro-
motions and advertising.We won’t bore
you with proprietary details, but we end
up with a much more accurate model.
By incorporating the fluctuations of the
group sizes in the face of promotions, we
increase the correlation between the
actual sales and modelled sales, r2, from
0.66 for the basic form of the model up
to 0.75 (Exhibit 5).
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Where next? ‘The chief

This is not the end of the process. We
believe the model could become more
benefit of
advanced. Having developed it in its the model
basic form, we now want to make it able is that it
to model the fluctuations between is possible
different user groups in a dynamic sense.
To achieve a more sophisticated prod- to relate
uct, we need to test it on more data.This findings
process has already started and we are to real
fine-tuning our approach with each new
set of data we gain access to. life’

Conclusions
The essence of our model is that, in an
age where data are becoming increas-
ingly more abundant, and the misuse
and misunderstanding of data has
become rife, we have created a way of
modelling that people can understand.
The reason for this is that our model
aims to model people’s behaviour – and
people, we find, understand people a lot
more easily than black boxes.
The chief benefit of the model is that
it is possible to relate findings to real
life. It allows refinement of brand, com-
munications and promotions strategies
with greater ease, and with greater
insight.We hope that even in its infancy
the reader can see how our approach
can help demystify the complex arena
of modelling.

1. K Schulz and D Meer: ‘How to make econo-

metrics more valuable’. Admap, Sep 2001.

Doug Edmonds
worked in the world of
fluid mechanics prior
to joining the world of
advertising. He now
runs the quantitative
sales analysis
consultancy,Tortilla
71,as well as being
head of numbers for
2cv:research.

Mark Brown is
director of planning at
the Marketing Store,
London.