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
- At a very basic level, how are base and incremental volume identified?
- Identify periods with a store promotion (denoted with Orange dot)
- Remove periods with a promotion, leaving non-promoted periods
- Adjust for seasonality
- 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.