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Promotion Analysis and Prediction from TPM data

3AI September 10, 2020

US subsidiary of one of the world’s largest food company

Problem Statement

  • Company had promotion data for a specific retailer in TPM system and wished to leverage it for advanced analytics and forecasting
  • Frequency of promotions were extremely high for the specific retailer, resulting in frequent dips of sales below the baseline
  • The effect of frequent discounting required a new approach to sales response modeling and forecasting

Analytics Led Approach

  • Conducted historical data review and provided insights, trends on promotion performance and sales/revenue distribution by chain and geography
  • A unique methodology to model the effect of continuous discounting on future sales was developed. This resulted in very reliable models to explain promotion responses and volume dips below the baseline
  • Incorporating this new approach provided insights into actual promotion tactic performances by retailer and geography

Business Impact

  • Volume forecasts were generated using the customized model and benchmarked against actual values
  • Analysis and model fitment provided insights into actual (decomposed) effectiveness of individual promotion tactics employed
  • Generated sales forecasts to aid demand planning using customer’s promotion plan for the next year

Critical Success Factors

  • Recommended a more optimal promotion strategy, based on variation in tactic (discounts, features and displays) effectiveness by retailer and geography

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