Module: Promo Designer

Executive summary

In this section, you get to design an optimal promotion that meets all your objectives.

The aim of a promotion is to make selected items more attractive to customers. A successful promotion has to satisfy two conditions:

  • It must target the right products.
  • Discounts on these products must be right.

A properly set discount must correspond with the objective of the promotion, i.e. you have to decide which of the two following strategies should be employed:

  • Maximize revenue: to increase sales, to attract as many customers as possible.
  • Maximize profitability: to do so, products with high margins are added to the promotion (into a leaflet) to increase profit of the whole promotion.

Another reason for launching a promotion is overstock that needs to be sold out. Promo Designer helps you to set discounts so that the product gets sold out in a given period (and you profit on the it as well).

Promo Designer works in two modes:

  • Analysis of an existing promotion: The system evaluates (and sets optimal discounts for) a promotion that you have created in a standard way in your ERP system and imported it into the STOCK system.
  • Creating a new promotion: The system sets optimal discounts for all sensitive products from your portfolio, so that you get maximum returns or profits. This way, we help you to decide which products should go into the planned promotion.

The module collaborates with the module Cannibalization; it can also compute what happens with the rest of the products in a given cannibalization group (both for existing and new promotions).

Functional description

Computing Promo Promoter

Precomputing scenarios

To give you optimal results, the Promo Designer needs to estimate (precompute) scenarios for various discounts.

Such a task, however, cannot be done to promotions of unlimited time and for all seasons at once (the results will be significantly different in summer and during Christmas, for instance). Therefore, you must specify initial data and specify the lengths of promotions for the precomputation. Consequently, once you create a new promotion in GUI, the system offers only the precomputed scenarios.

The module Promo Designer uses the modules Forecasting promotional sales and Cannibalization.

Warehouses / stores / customers groups in setting promotions

In retail, promotions are typically set for a group of stores (all of them) – not just for a particular store. However, depending on customers’ behavior, an optimal discount might be different for different stores.

It is therefore advisable to define units (groups) of stores over which promotions get computed. Typically, we deal with uniform formats in a store network. Then, a single optimal discount is computed for the whole group of stores; the discount can differ product by product among different groups.

Analysis of an existing promotion

At the beginning, you need to select an existing promotion.

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  1. Choose an existing promotion

After the promotion is selected, the following picture appears:

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  1. Summary table: The table shows revenue and profit in total for all the products in the given promotion.
  • General overview – the original profit and revenue.
  • General overview after optimization – the profit and revenue after various optimizations have been applied.
  • Difference due to revenue optimization – the difference by which the revenue increase / decrease due to optimizing revenues.
  • Difference due to profit optimization – the difference by which the profit increase / decrease due to optimizing profits.
  • Difference due to other optimization – the difference by which the revenue and profit increase / decrease due to user-introduced changes in a product detail.
  1. Cannibalization summary (Displayed only if cannibalization is set).
  • General overview of cannibalization – the original cannibalization in profits and revenue.
  • General overview of cannibalization with optimization – the cannibalization in profits and revenue with all applicable optimization.
  1. Choosing optimization
  • Without optimization – the optimal discount is equal to the original discount of the product in promotion. Values of sales, profits and quantity appear as integers in the table.
  • Revenue optimization – the optimal discount is equal to the discount at which the product has the highest revenue. Values of sales, profits and quantity are displayed as a difference between the original value and the optimized value.
  • Profit optimization – the optimal discount is equal to the discount at which the product has the highest profit. Value of sales, profits and quantity are displayed as a difference between the original value and the optimized values.

To display revenue optimization:

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  1. Products in promotion table
  • Motive – the reason for selecting the product (revenue optimization, profit optimization and/or user introduced change).
  • Clicking the product detail – the product’s details are displayed. The screen is shared by existing and new promotions; it is described in the section “Product details in Promo Designer” later in this module.
  • List of promotions – historical promotions on SKUs / products.
  • % – the original discount.
  • opt% – the best discount.
  • (Values of) Sales / Promo / Increment in Revenue / Profit / Quantity
    • when viewed without optimization, the ​​displayed values show the total value
    • when optimization is chosen, the displayed values show a difference between the original value and the optimized value
    • selecting a product, the displayed values show the total values.
  • Cannibalization – is displayed only if the cannibalization is set up.
  • Reliability – the reliability for the optimized discount.
  • Maximum reliability – the highest reliability on the given product (across all discounts).

Clicking the product detail – the product’s details are displayed. The screen is shared by existing and new promotions; it is described in the section “Product details in Promo Designer” later in this module.

Creating a new promnotoin

When creating a new promotion, there are two ways to go: either you can create a completely new promotion – or you can choose one from the already existing promotions (created using Promo Designer).

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  1. Create a new promotion – or choose an existing one.
  2. Details of the currently selected promotion. Clicking “Change”, the displayed data can be edited. If you edit the relevant data, all the products that were originally included in the promotion will be automatically deleted; the irrelevant data editions do not influence the given promotion.

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  1. Choosing optimization
    • Revenue optimization – the optimal discount is equal to the discount at which the product has the highest revenue.
    • Profit optimization – the optimal discount is equal to the discount at which the product has the highest profit.
    • Overstock sell-out – the optimal discount is equal to the discount at which the quantity of the sold product is the closest to the quantity of overstock.

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  1. Summary table: the total profit and revenue for all the products in the promotion.
    • General overview – the values of profit and revenues of selected products.
    • Revenues – the values of profit and revenues of products selected to optimize revenues.
    • Profit – the values of profit and revenues of products selected to optimize profits.
    • Overstock – the value of profit and revenues of products selected for a sell-out of overstock.
    • Other optimization – the values of profit and revenues of products that were changed on the product detail by a user.

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  1. Products in promotion table
    • Include in promotion – a selection of products to include in the promotion.
    • Motive – the optimization that was the reason for choosing the product. If the user has adjusted the discount or the purchase price in the promotion in the product detail, the reason is “user”.
    • Detail – the product’s details are displayed. The screen is shared by existing and new promotions; it is described in section “Product details in Promo Designer” later in this module.
    • List of promotions – historical promotions on SKUs / products.
    • opt% – the best discount to maximize the selected criterion.
    • (Values of) Revenue / Profit / Quantity.
    • Cannibalization – is displayed only if the cannibalization is set up.
    • Reliability – the reliability for the optimized discount.
    • Maximum reliability – the highest reliability on the given product (across all discounts).

Product details in Promo Designer

By clicking the magnifying glass in the summary tables, the details of a particular item appear:

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  1. Price overview
    • The promotional purchase price can be adjusted: hence, various suppliers’ behavior can be simulated.
  2. Displaying estimates for different percentage discounts
    • These estimates display forecasted revenue, profitability and quantity.
    • Reliability of the promotion analysis is color-coded. (Reliability is higher, if there were enough promotions and if the results came with sufficient accuracy).
    • The displayed range of discounts shows the range of the ‘training set of promotions’.
  3. Buttons to work with the product detail page. If you want to change – say – the purchase price, it is not enough just to change it; you must click the Save button and let the system reload.
  4. A table with revenue, profit and quantity
    • Normal sale – forecasted sales of the product outside of promotions.
    • Maximizing revenues – the values ​​computed for optimal discounts while maximizing revenues. Using the “Settings”, the optimal discount overwrites user’s values.
    • Maximizing profit – the values ​​computed for optimal discount while maximizing profits. Using the “Settings”, the optimal discount overwrites user’s values.
    • User set values – the values ​​computed for the discount set by the user. When saving the form, the user’s discount is loaded.
  5. A chart showing dependence of discounts on revenue