Trade promotion and optimization tool for one of the largest FMCG client

Our client is one of the largest fast-moving consumer goods company (FMCG)  which manufactures +135 SKUs and has more than +1000 distributors.

The objective is to equip client with smart trade promotion planning and sales forecasting tool built on predictive analytics

TransOrg Analytics developed Trade Promotion Optimization to:

• Evaluate promotion effectiveness of trade promotions (both primary and secondary)
• Data diagnostics, statistical modeling, end-user what-if simulation dashboard

Stage 1: Estimate baseline demand and total promotional uplift by SKU

Multiplicative state space modelling

Model estimates baseline and total promotional uplift

Model tests for the following factors :

• Retail Price Elasticity (requires retail price data)
• Seasonality
• Cannibalisation
• Promotional Dips
• Promotional Factors (Control variables for Flyer type & Mechanic)

Stage 2: Decompose promotion uplift into factor contributions by product group

Uplift by product group, flyer type & promotion mechanic

Panel models by product group & DC

Bayesian shrinkage to decompose promotional uplift into contribution based on factors

• Model decomposes Base Demand Volume & Promotional Demand Volume Uplift
• Library detailing the past promotions.
• Clear insights on past performance and future course of action
• “What-if” simulation tool for predictive planning and selling