Not all promotions are effective in
driving incremental sales, units, and
profits for manufacturers and retailers. Two
important negative impacts to understand are
the effects of time-shifting of consumer
purchases and product portfolio
cannibalization.
Time-shifting can occur when customers
adjust their purchase cycle to take
advantage of promotions, modifying consumer
behavior to only buy the product
on-promotion and/or pantry-load during
promotions to eliminate the need to buy the
product at a normal base price level.
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High
frequency and repetition of promotions and
price points can also lead to
cannibalization of other products within the
portfolio and the category. Consumers
purchasing the promoted item instead of a
non-promoted product can negatively affect
the promoting company as well as the rest of
the category.
Data Ventures’ Promotion Decomposition
solution can identify the truly effective
promotions at the item, brand, supplier, and
category levels to determine which
promotions are beneficial for both the
manufacturer and retailer. For each
evaluated promotional event, Data Ventures
quantifies the true unit and dollar impact
of time-shifting and cannibalization based
on POS/scan and shopper data.
This analysis can be conducted on simple
sales data, or all respective promotional
costs can be incorporated to deliver the
perspective on incremental profit for both
the manufacturer and retailer.
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