Promotion plays a vital role in the Retail business due to the high competition among the brands and Retail Stores. While the dramatic cost increases influence the business to spend more time on the promotion evaluation.
In this article, we would like to introduce the method of promotion evaluation to be your choice.
In the Retail Process, the step is started from
- Retail store drives the commercial offers, and promotion is one of them
- Shoppers’ response to the commercial offers with the traffic and spending
- Then sales are generated
- If supplier A drives sales higher than the category, then Supplier A gains the market share.
The promotion evaluation will be articulated around this Retail Process.
1. Financial Results
This is the main KPI for every business. The measurement could be made for both Promo SKU only and at Brands or Category Level to see the impact of the promotion SKU on the total of my business.
When we run an analysis, it should be done at the item and brand levels.
Below is the item “Great Value Biscuit Chocolate 90g” promotion result. This item could generate extra sales $5,000 per week with the investment at $1,500 per week. Therefore the ROI in sales is at 2.33 time.
The main objective of evaluating this promo SKU is to determine its profitability. We need to check further if this promo item could help generate more traffic and spending for other items.
Below is the result at the brand level for the “Great Value” brand. It shows that the promotion of the item Great Value Biscuit Chocolate 90g helps to increase Great Value sales and bring great results of ROI.
In some cases, we found out that Brands get cannibalism effect, so finally, total brand sales might not increase.
2. Competition Result
This measurement is to ensure our performances win over the competition. The evaluation will be at the SKU and Brand level, the same as the financial evaluation.
Why do we need to measure it?
In the Retail Business, it is a ton of seasonality and events. It means you can grow sales significantly without doing any promotions. So we want to ensure the promotion makes us grow higher than the competitors.
Below performance at the brand level of “Great Value“ can be interpreted as follows.
- Promotion helps brands increase by 1% of market share.
- Great Value shows the effectiveness of the marketing effort compared to the Market Share they get.
3. Shopper Result
Three levels depend on the data you have and how deeply you want to explore.
At the Basic Level.,
What can we read?
Understanding the cause of sales increased either from Traffic (Number of Baskets) or Spending (Value per Basket).
It is to measure if the result is achieved as per the target and the mechanic we design.
At the Advance Level.,
What can we read?
Penetration increases means this promotion could help us to be more attractive among the shoppers who walk around in the stores. While the Wallet share dropped means this promotion helps us penetrate in the big spending basket.
At the Professional level,
What can we read?
Penetration increases means this promotion could help us to be more attractive among the shoppers who walkaround in the stores. While the Wallet share dropped means this promotion helps us penetrate in the big
This promotion helps my brands to be in the Brand list of my Shoppers, which means Shoppers buy my brands and still purchase other brands. In terms of brand switching, we lose Shopper to competitors rather than gain from them.
