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Discount appreciation

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Discount appreciation

#Smart operations

Promotions given by retailers and manufacturers have a complex structure, which includes both monetary and non-monetary components, as well as immediate and long-term effects. These effects can be difficult to measure and even more difficult to predict. In order to optimize the strategy of promotions (quantity, price, time, product,…) is it necessary to be able to appreciate the value and impact of a promotion.

Benefits of promotions

#Smart operations

Promotions are beneficial for the retailer as it increases the volume of sales. The reasons for this are that promotions stimulate return shopping trips. Manufacturers and retailers share the goal of stimulating more shopping trips, so promotional campaigns are often geared towards this mutually beneficial goal. Furthermore, promotions increase basket size. Some promotions are explicitly designed to make people buy more of a given product. Other types of promotions can decrease the consumer’s expenses and release money for additional purchases. Additionally, promotions improve loyalty to the retailer. It is natural for a consumer to perceive promotions as a result of a collaboration between the manufacturer and the retailer, so both are credited for their effort in adding value and improving the consumer experience.

Negative effects of promotions

#Smart operations

But promotions have also negative impacts that must be evaluated. Promotions have a cost: either the loss of sales for similar products that would have been bought otherwise or the loss of revenue due to the promotion itself.

Having a clear and self-learning evaluation of promotions is mandatory to track and optimize the use of it.

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