Office products-2

Business Challenge

  • A US office products retailer wanted to optimize its promotional spend on various SKUs in paper– they wanted to know what type and depth of promotion should be used for each brand
  • They sell 6 major brands (3 national, 3 private label – Low Price, Value and Premium) and use various types of promotion (price reduction, Buy X Get Y and Mail-in rebate)

Analytics Approach

  • We used times series regression to estimate sales and margin impact of each type and depth of promotion (including cross-elastic effects)

Impact

  • It was discovered that
    • Promos on the private label (value) brand cannibalized sales significantly
    • Discount thresholds for each brand were identified beyond which margin declines. Retailer maximized their margin by imposing staying within the discount thresholds

Paper prod promo