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The power of simulation

Trade Promotion Optimisation | Simulation | ROI

This global FMCG wanted to identify the trade promotion and pricing strategy that would maximize ROI for a new product launch in the Balkan region.

CHALLENGE

In-house solutions were limited to intuition, experience, historical data and Excel is God.

The company had recently invested in some third-party trade promotion analysis tools, but was unhappy with results, as only a subset of promotion and pricing strategies could be tested at the same time and there was no way to realistically factor in competition.

We were asked to build a solution that could test a plethora of different scenarios, covering both internal decisions such as pricing, distribution, trade promotion activations and external factors such as consumer’s shopping habits and competitor pricing.

SOLUTION

Α custom what-if simulation tool

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We built a custom what-if simulation tool through which our customer’s product managers and analysts could easily test out alternative promotion strategies under different market conditions. Halo and cannibalization effects as well as the over time impact of different promotions were brought to light and understood.

A series of KPIs were produced for each scenario such as forecasted sales, market share and ROI and the customer could then easily rank each promotion strategy based on the relative importance of each business objective. Our customer ended up selecting the promotion and pricing strategy proposed by our solution and achieving an ROI higher than the one originally planned.

Sounds interesting?

Get in touch now and we can schedule a free, one hour, consultation. No strings attached.

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