Promotion Engine

Promotion Engine

With the Promotion Engine, it is possible to objectively control the advertising success of implemented promotions and to improve the efficiency of prospective promotions.  The Promotion Engine allows you to plan entire promotion series, whereby the promotion prices of the competitors can be integrated into the software solution.

Promotional offers continue to increase

For retailers, promotional offers whether flyers as circulars, price campaigns or approaches targeted directly at well-known customers, are an important medium for customer acquisition and retention. The Promotion Engine, a component of the Retail Simulation Engine from Dacos®, allows retailers to significantly improve the effect of their advertising campaigns.

Not least due to the fall of the discount law, the number of promotional offers taking place today has increased steadily and makes up over 20% of the sales in hypermarkets.
While discounters position themselves on the market with permanently low prices for their complete, yet small, assortment, full-line distributors must take a different approach. They must prove that they have the more superior assortment and high competence in their entire spectrum of goods, without on the other hand, losing their image of low prices.

Temporary promotional offers and discounts only make sense when aimed at increasing customer frequency and securing sales. By cleverly coordinating advertised articles you can demonstrate competence in your assortment selection and induce your customers to cover all their needs at one source.

Using Assortment Competence for Promotional Offers

In well-sorted promotional offers there is an advertised article for each potential customer. Thus, each customer feels himself being addressed personally by the retailer and this in turn, leads to a positive price perception. On the other hand, the customer gets the impression that the retailer is taking “his or her assortment“ into consideration in his campaigns. If many customers feel they are being addressed personally then they will not only buy the articles advertised, but also other articles belonging to the assortment when shopping.

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Promotion Mix Optimization

The Promotion Mix Optimization is the core of the Promotion Engine. It simulates and optimizes the assortment coverage by selecting articles for a series of promotional campaigns.

Based on slip data, in particular on data taken from periods comparable to those of  the planned promotion, the Promotion Mix Optimization creates a mathematical model of the behaviour of those customers who generally buy the articles planned for the promotion:

  • For a given mix of articles the Promotion Mix Simulation calculates the expected number of item sales, the total revenue and profit, and this in addition to the purchasing of these articles. This allows the user to compare alternative recommendations with each other and consequently to make the best selection.
  • The Promotion Mix Optimization automates this process and independently calculates such a mix by which, based on the given requirements, the sales quantity, sales or return of the mix, including the articles “pulled along”, is optimized.
  • The articles or article groups being considered for the article mix can be defined in order to use for example advertising subsidies.
  • Are some articles already confirmed for promotions shortly before or after the period to be planned? These can then be excluded from the analysis for a given period of time.
  • This optimization is especially interesting for eye-catchers that may be interesting for the front page of a flyer or printed advertisements. The coverage calculated by the mix then applies to the entire product range. It is also possible to determine a perfect mix with regard to articles in this area and thus, appeal to the customers of a selected product range.
  • The program not only optimizes promotions, but also distributes the articles over a series of promotions within the period in question so that their placement achieves the optimum effect and doesn’t fizzle out due to frequent repetition.
  • You can access the Focus-database for promotional prices online in the application itself. The promotional prices can be taken over from there or set manually. They are then exported together with the selected articles for the further execution of the promotion.

Studies made on promotions actually carried out have shown that the coverage of the assortment can be significantly increased by such an optimized promotion.

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Further Components of the Promotion Engine

Reliable analyses on all hierarchical levels within the merchandise categories down to bundled and single items, but also based on selected suppliers or brands, are also a part of the Promotion Engine.

Complete reporting views are also available. These cover the retail price, sales volume, sales and return histories, as well as histories with listings and delistings, promotional activities and the days on which certain articles were bought.

These analyses can for example, be used to select the articles suited for the Promotion Mix optimization.

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Requirements for Use

As an application of the Retail Simulation Suite, the Promotion Engine is part of a modern, scalable software architecture. In addition to the installation of the Retail Simulation Engine on an application server and the graphic user interface on the user’s workstation, the Promotion Mix Optimization requires access to a data-warehouse with the relevant data. Today, usually all information required is available there, for example:

  • Slip data over a period of at least a year, including the unit sales prices and, whenever possible, current purchase prices
  • The merchandise group hierarchy for the selection of those articles to be considered for determining the article mix

Further information on the configuration of the Promotion Engine, such as for example, the periodicity of promotions or the seasonal data relevant for the comparability of periods will be collected together with our Dacos consultants in the course of a consultancy project.

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