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