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Co-presenting a webinar on “Long term impact of promotions” with PepsiCo


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Together with PepsiCo, we have run a pilot study where we modeled the market from two perspectives: past sales data as well as an ad hoc conjoint study in order to find a way to identify the best (new) promotions, and assess both their short term and their long term impact.

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Co-presenting a webinar on “Long term impact of promotions” with PepsiCo

  1. 1. Assessing the Long Term Impact of Promotions Looking back and forward: combining 2 different research methodologies
  2. 2. Today’s speakers Maureen Arink Leonie Barelds-Cramer > Shopper Insights Manager and Business Analyst Savoury Benelux > PhD Mansholt Graduate School > 8 Years at Pepsico in several Consumer Insights roles > Senior Research Director > 20 Years at SKIM > Focus: CPG Pricing and Promotion, Conjoint
  3. 3. 3 In the past Request now Conjoint Analysis Studies for Pepsico Promotions insights
  4. 4. 4 Benefits But... But...
  5. 5. 5 Long term impact? Create a model based on historical sales But what about…
  6. 6. Proposed solution Short term Long term
  7. 7. Selection of category & country Requirements EDLP
  8. 8. Business Questions “Identify the immediate and long term impact of specific existing and new promotion types on SKU, brand and market size” There’s an issue…
  9. 9. Looking at history Looking at the futureLooking at the future
  10. 10. 3 years of detailed sales data by retailer (SKU volumes, prices, distribution, etc) and promotion executions in the same period Modeling of impact of promotion types in the period of promotion, the post-promotion dip and the long term impact on the brand and the market Creation of simulation tool that predicts outcomes for different promotion scenarios Looking at history: Long term model
  11. 11. 0 3 6 9 12 15 Brand 1 (12 SKUs) 0 3 6 9 12 15 Brand 2 (9 SKUs) 0 3 6 9 12 15 Brand 4 (4 SKUs) 0 3 6 9 12 15 Brand 3 (20 SKUs) Model Market data Week: Week: Week:Week: Weeklyvolume WeeklyvolumeWeeklyvolume Weeklyvolume Validation – Overall correlation: 0.949
  12. 12. Respondents completed 12 virtual shopping strips (conjoint based) We assess sensitivities to attributes (brand, price, promotions) Create a simulation tool that predicts outcomes for different scenarios (different promotion types on different brands) Looking at future: Short term model
  13. 13. 93% 74% 134% 108% 125% 65% 74% 70% 66% 63% Y% discount Y% discount on accompanying product 2 for €X 2 for €XX Now for €Z Revenue % growth Volume Share % growth Immediate impact of promotion on SKU’s volume and revenue Also, identification of: - Impact of promotion on 1 or several SKUs on total brand volume and revenue - Source of volume (i.e. where does the increased volume come from)
  14. 14. Week: Promo-week Post-promo ‘dip’ Stabilization Volume impact on SKU X – Promotion type “Multi-buy” 0% 56% -2% -1% -1% 1 1.5 2 2.5 3 3.5 4 4.5 5
  15. 15. Key insights •In general, the volume impact measured in the Short term (future) model tends to be overestimated if compared to the (initial) volume impact in the Long term (historical) model. •Deeper promotions (like “2nd for free”) do not always have more impact than other promotions: initially they get a higher volume due to higher volume per purchase but in the long run the SKU / brand volume may stabilize to a lower volume level than for other promotions 1 Promotion: “2 for X€” for SKU A Looking at future (Short term model): volume +134% Looking at history (Long term model) : volume +56% Promo type Price cut (e.g. Y% off) Multi-buy (e.g. “2nd half price” or “2 for X€”) SKU initial volume impact +38% +56% SKU LT impact +1% -1% Brand LT impact +0% -1%
  16. 16. Key insights •The best promotion type for one channel is not necessarily also the best promotion type in the other channel. •Often, the promotion that has the highest impact is determined by the type of channel, the type of promotions that consumers are used to in that channel, and the type of consumers that go to that channel. 2 Promotion “2 for X€” Promotion “Now Y€” High-Low channel +171% +150% EDLP channel +58% +246% SKU B volume uplift, based on Short term (future) model:
  17. 17. Key insights •Different promotions have a different impact on short term and long term (high initial impact followed by a low or even negative long term impact or vice versa) •Therefore, it is important to combine different promotion types in order to have a total positive result on both short term and long term. •In any case, promotions with negative long term impact should be avoided at all times 3 Promotion “2 for X€” Promotion “Now Y€” High-Low channel +1% +6% EDLP channel -1% +1% SKU B Long term volume impact, based on Long term (historical) model: Promotion “2 for X€” Promotion “Now Y€” High-Low channel +171% +150% EDLP channel +58% +246% SKU B volume uplift, based on Short term (future) model:
  18. 18. BOY Constraints ApplicabilityFrequency
  19. 19. Next Steps
  20. 20. Thank you Maureen Arink Senior Research Director at SKIM Group Leonie Barelds-Cramer Shopper Insights Manager at Pepsico