Price Promotions

Background:

A leading US supermarket chain approached AMS for an evaluation of the effectiveness of its price promotions with specific reference to its weekly promotional doorstep flyer.

• What impact did price promotions have on sales?
• How large was the effect?
• Was it profitable?
• Did sales warrant its production?

Analysis and Teamwork:

Working closely with our client we decided to focus the initial investigation on a specific category, in this case branded beer. This analysis would allow us to evaluate how specific promotions strategies affected unit sales.

A category map was created utilising marketing and sales data, along with ambient data such as temperature, national holidays etc. This map provided key insights into which factors were driving the market.

Econometric models were produced using Winsight, mapping the elasticity of the main driving variables to volume sales. Smart Dashboard then processed this data to produce an ‘interactive tool-box’ allowing the virtual manipulation of the marketing mix i.e promotional strategies, pricing and distribution.

This' tool-box' allows managers to accurately evaluate the effectiveness of their marketing strategy to optimise profitability.

Recommendations and Results:

AMS assisted the client in focusing on effective price promotions to increase profitability and streamline costs.

Our investigation showed us that certain products benefited from particular strategies subject to their dependent, independent and interdependent variables.

Using the ‘tool-box’ we could demonstrate to the client that price promotions only affected certain brands with specific inherent traits. The doorstep flyer itself had very little overall impact. Our conclusions demonstrated that the costs of developing and distributing this flyer out-weighed the benefits produced by it.