Business Objective
Our client is a Consumer-Packaged Goods manufacturer in the Pet Foods Category. The client has a strategic partnership with Tiger Analytics for sales, supply chain, and marketing analytics.
The client engaged us to develop a trade promotion optimization solution with the below objectives
- Map trade promotions spending data to sales and analyze responses to CPG funded trade promotions run in retailer’s stores
- Identify trading-up/down cannibalizations within-box as well as cross-box
- Estimate the net impact of promotions on consumption volume & value
- Develop a tool for future scenario planning to estimate lift vs cannibalization
- Develop an optimization tool to recommend promotional events for PPG items across retail categories
Challenges
- Lead times in identifying & procuring necessary data from external partners
- Linking data from trade promotions planning system to sales (PoS & Syndicated)
Solution MethodologyÂ
- Identified variables across different dimensions to provide a comprehensive view viz. Price (Own & others), seasonality, trend, distribution, inventory, marketing spends, holiday, weather, macroeconomic factors, etc.
- Developed statistical models to baseline sales and estimate lift due to Price and Non-price related promo activities
- Estimated within-box and cross-box cannibalization effects to establish true incremental lift
- Built a scenario planner tool to perform calendar plans for promotional events and understand the impact on various metrics
- Built an optimizer tool to model each PPG’s True Sales Lift as a function of their Spends (applying business constraints for each PPG)
Business Impact
- Estimated 10% increase in sales on a business value of $10 B and 6% improvement on ROI on trade spends of $1 B
- Established a reliable and robust model-driven methodology for performing trade impact analysis
- Enabled account managers with insights to plan promotions that will have minimal cannibalizations, hence higher true lift
