Market Modelling — Consumer Promotions


Exhibit 27.8   Overview of promotions response modelling.

The basic assessment of sales promotions reveals the impact of the promotions on sales, revenue and profitability. It does not however answer a number of critical questions, including the ones listed below:

  • What elements of the promotion are more effective in driving sales? What is the impact of the discount, the display, and the cooperative advertisement?
  • Does the promotion cannibalize manufacturer’s own brands? Or does it "steal" share from competitor’s brands?
  • To what extent does the promotion help build category volume?
  • How much more volume could be gained if the discounts are further increased?
  • What is the optimum promo mix that maximizes sales volume without incurring any loss in profit?
  • Does the promotion draw incremental traffic into the store? What are the gains in revenue and profit arising from the increase in sales of those products found in the baskets of the gained shoppers?

Econometric promotions response models yield answers to the first five questions posed above, and the remaining question can be addressed by retail analytics.

The outline of the econometric promotions models, in terms of inputs and outputs, is shown in Exhibit 17.8. These models analyse data to establish the impact of each individual element of a promotion on sales. The sales response functions derived from these models yield estimates of discount elasticity of demand, discount cross elasticity of demand, and sales lifts due to displays, co-op advertising and other causal factors. It is possible to decompose sales into all of the elements contributing to the volume. Promotion response models can also forecast what impact a possible combination of initiatives will have on sales. These econometric modelling methods are covered in some detail in the chapter Market Mix Modelling.

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Promotions Evaluation

Promotions Evaluation

Automated online solution for analysis of promotions.


What they SHOULD TEACH at Business Schools

What they SHOULD TEACH at Business Schools


Is marketing education fluffy too?


Experiential Learning via Simulators | Best Way to Train Marketers

Experiential Learning via Simulators | Best Way to Train Marketers


Marketing simulators impart much needed combat experiences, equipping practitioners with the skills to succeed in the consumer market battleground. They combine theory with practice, linking the classroom with the consumer marketplace.


Online Apps for training on Promotions

Online Apps for training on Promotions


The Plannogrammer is an experiential learning facility for category managers, trade marketers, and retailers in consumer markets. Ideally suited for hybrid learning programmes, Plannogrammer imparts hands-on training in the planning and evaluation of promotions and merchandising.

It supports a collection of simulation and analysis platforms such as Promotions and Space Planner for optimizing space and promotions, Plannogram for populating shelves and merchandising, a Due To Analysis dashboard that decomposes brand sales into the factors driving sales, and a Promotion Evaluator to evaluate the volume, value and profit impact of promotion plans.