RMS Academy-Promotion (en)

Introduction

Welcome

Learning Objectives

This session will teach the importance of promotions (discounts/merchandising) in impacting sales at retail and ensure learners are able to: 

  • Identify different volumetric measures (Baseline, Incremental, Promoted, Non-Promoted and Subsidized Base) and determine how they relate to each other to gauge promotion impact.
  • Analyze promotional measures impact on volume and value sales.

Frequently Asked Questions

Promotion questions include…

  • What portion of my sales are on promotion? What portion of my competitors sales?
  • Do my sales increase with a sales-driven promotion?
  • Am I over-promoting or under-promoting?
  • What promotions have been the most successful?

Sales Relationship

Analyzing Sales

Nielsen has several measures used to break out volume sales. Let’s learn about these measures and how they are calculated.

  • Total Sales can be broken out into Promoted and Non-Promoted.
  • Total Sales also equals Incremental and Baseline, although these terms are not interchangeable.
     

We'll learn more about each of these terms in this training. 

Sales Terminology

Promoted volume is the Total Sales in stores during timing (weeks) when promotions were present.


The example demonstrates product volume in two stores, each white block representing 1 unit. Promotions in:

  • Store 1: Weeks 6 and 11
  • Store 2: Weeks 2, 7 and 11

Promoted Volume (Orange) = 26
Non-Promoted Volume (Gray) = 38

 

Subsidized Base volume is the Baseline sales in weeks where promotions were present. Also known as subsidized sales or reward.

The example again demonstrates product volume in two stores.

Subsidized Base (designated by light green circles) is the portion of promotional volume that is subsidizing the ‘base’ consumer business.

Subsidized Base = 26

 

Baseline volume is the Sales expected in the absence of promotion.

Incremental volume is the Total volume minus Baseline.


This example demonstrates product volume in two stores.

  • Baseline designated by the purple circles.
  • Incremental designated in green.

Baseline = 48
Incremental = 16

 

Base and Incremental Sales Methodology

  1. At a very basic level, how are base and incremental volume identified?
  2. Identify periods with a store promotion (denoted with Orange dot)
  3. Remove periods with a promotion, leaving non-promoted periods
  4. Adjust for seasonality
  5. Using an exponential smoothing technique, a baseline is derived from the non-promoted seasonally adjusted periods 


Promoted, Non-Promoted, Baseline, Incremental and Subsidized Base each provide their own measure of their volume. Often it is assumed that Non-Promoted and Baseline will be equal, but they should not be expected to be equal. Even in our very easy example with simple volume in 2 stores, the volume was not equal.

What is Driving Sales?

Sales measures are combined to determine the impact of trends.

Step 1: Sales






Isolating sales alone, there is not enough information to determine what is happening

 

 

 


Step 2: Sales and Price






By adding price, we can see that at times sales was higher when price was the same. But why? We need additional information.

 

 



Step 3: Sales, Price and Promotion 





We can better evaluate sales when we can overlay price, promotions and other marketing activity. It is important to overlay factors that may impact sales to understand the whole story.

What Affects Sales?

Many factors can influence base and incremental sales. 

Select the correct sales type for each of the term given below.

  1. Distribution 
  2. Display/Exhibition 
  3. Media Advertising 
  4. IRCs 
  5. Non-Promoted Price 
  6. Manufacturer Coupons 
  7. Assortment 
  8. Competition 
  9. TPR 
  10. Out-of-Stocks 
  11. Brand Quality 

Product Matrix Summary

Base and Incremental trends help determine potential strategies.

Click on each quadrant's 'i' to understand more.

Sales Effectiveness and Efficiency

Effectiveness Client Questions

Can I decrease price to get profitable increases in sales? If so, how much? 

Effectiveness

Sales Lift is a measure used to determine the effectiveness of a promotion.

Sales Lift = Incremental Sales  x 100 
                    Baseline Sales

 

Exercise: % Sales Lift

Focus on the Modern Man Promotion in Week 6 to complete the activity. 


From the drop-down menu select the correct answer to complete the sentences.

There was a  % lift in sales for the Modern Man brand over what would normally have been sold in the absence of any store level promotional activity. 

Modern Man Promoted sales were   times what would normally have been sold in the absence of any store level promotional activity. 

 % of Modern Man Promoted sales were incremental to baseline. Therefore,   % would have been sold in absence of any store level promotional activity.

Effectiveness Measures

When measuring promotional effectiveness it is important to consider these factors. 

Efficiency

Sales Efficiency determines what amount of promoted sales were generated specifically as a result of the promotion.

Sales Efficiency = Incremental Sales  x 100
                               Promoted Sales

Exercise: Sales Efficiency

Use the Modern Man example to determine efficiency in Weeks 6, 11 and Overall. Match the Sales Efficiency to the correct weeks.
  • Week 11
    Sales Efficiency = 50
  • Week 6
    Sales Efficiency = 75
  • Overall
    Sales Efficiency = 66

Promotion Analysis Path

Different measures help analyze Incremental issues vs. Baseline issues.

Promotion assessment should be evaluated across Products, Markets (Regions, Channels and Retailers), Periods and Merchandising types. 

Modern Man Case Study

Overview

Background: 

Modern Man is completing their scope of the Men’s Moisturizer and Basic Care Category with a review of their promotional strategy compared to the biggest competitor, Nature’s Potion.

Objective:

Modern Man needs to proactively review promotions to determine the on-going strategy.

Sales: Promoted vs. Non-Promoted


From the drop-down menu select the correct answer to complete the sentence.

Modern Man is  promotions than competitive brands.

Promotion


Match the correct sales performance to the Brands.
  • All Other
    Share declines across the brand
  • Modern Man
    Increased shares in both Promoted and Non-Promoted
  • Natures's Potion
    Non-Promoted share decline, could indicate negative impact on brand health

Modern Man Promotions

  • December 2011-February 2012, from blended Feature/TPR Promotions
  • June 2012, due to high % ACV TPR
  • August 2012, due to lowest price per unit
What have been the most successful promotions?

Nature's Potion Promotions

How do Nature's Potion promotions compare to competition?

Nature‚Äôs Potion Value sales were driven by a combination of price  and promotional activity. The  sales month had a combination of promotion types and a low price per unit, in comparison to other months.

Modern Man Case Study Summary

Executive Summary 

Modern Man is more dependent on promotions than competition.

Modern Man increased share with both Promoted and Non-Promoted sales. Increases in Promoted could demonstrate deal-dependent consumers, although Non-Promoted increase shows increased brand health. Modern Man experienced minimal promotion activity, dominated by TPRs.

Competitive brand, Nature’s Potion, value sales driven by a combination of price decreases and promotional activity. The best sales month had a combination of promotions and a low price per unit.