Promotion Strategy Analysis

Brief

APAC based apparel retailer was looking for better tools to plan yearly promotional campaign

Challenge

Promotion campaign were decided more on the gut of the manager than based on data. Consequently, the outcome of yearly promotions were not consistent and hence it was difficult to plan the inventory

Our Action

• Fix criteria for putting the products on promotion;  the factors which were studied included previous years sales, volume, margins, and inventory cost
• The price elasticity  was measured at SKU level to ascertain correlation between price and volume
• The mechanism was set to arrive at best price for items under promotion
• The cannibalizationimpact was  analysed to keep it minimum
• The marketing campaign was designed based on the simulation using consumer  propensity model for different groups

Results

• Provided tools that helped client in forecasting impact of promotion on revenue, margins & volume
• Promotion campaign were more effectives then ones in the previous years
• Lower Inventory cost due to improved forecastof volumes during promotion.