Optimising the impact of promotional activity

Abstract

Given the sheer scale of investment, resource and time required by both consumer packaged goods manufacturers and retailers to deliver promotions to end consumers, a comprehensive programme of promotional optimisation should not just be an aspiration, but at the centre of the way these organisations operate. Enormous promotional evaluation efforts are being undertaken by both consumer goods manufacturers and their retail customers, and many see improvements when executing the basics well; nevertheless, there is significant untapped potential across the numerous key building blocks of promotional optimisation. Modelling and analytics have a substantive role to play at the heart of the promotional evaluation process, building on basic data foundations by enabling an understanding of base vs incremental sales, promotional elasticities and promotional uplift. It is vital that such insights are translated into both financial and commercial implications: to develop promotional guidelines for more effective and efficient future plans, and to run scenarios that help to predict optimal discounts and forecast future potential. This paper will explore some of the key building blocks, processes and outputs required to make promotional optimisation a reality and will illustrate the significant commercial opportunity of getting it right.