collaborative promotion optimization · 2020. 3. 1. · digital to brick and mortar • tests of...

Promotion Optimization Institute • Fall Summit 2014 • Dallas, TX

TPM-TPO-

Collaborat ive

Market ing

is BIGGER

in Dallas!

Collaborat ive Promot ion Opt imizat ion & Cont inuous Improvement Summit

How Innovating Offers Leads to Radically Better Promotions How leading consumer goods companies such as BIC, Unilever, and AB InBev are able to uncover more effective in-store promotions by digitally micro-testing thousands of offer variations with real shoppers.

Strictly confidential. Do not duplicate. Do not forward. Copyright 2014. All rights reserved. 2

Notice of Confidentiality

This document is strictly confidential and prepared for the purposes of

evaluating a potential license of Eversight, Inc.’s technology. None of its

contents may be shared without the express written permission of the

authors. Patents pending. All rights are reserved. Copyright 2014. Do not

duplicate. If you are not the intended recipient of this file please destroy

immediately and contact the author at +1 862 452 0650.


Speaker bio

David Moran, Co-Founder

• Global VP of Revenue Management for

Anheuser-Busch InBev nv/sa

• Leader in McKinsey & Company’s

Consumer Pricing Practice

• Led McKinsey’s early development of its

Trade Promotions Optimization software

for CPG


The consumer goods squeeze

Pressure to grow top line

Lower trade budgets

Underperforming promotions

Inadequate analytical tools


The $300B

Challenge

50%+ 17% 25%

Trade rate by 2016 Trade rate in 2012 % promos lose $


Sea of Sameness


What if you knew precisely which

promotions would work best before

running them?

What if you could be right every time?


Introducing Trade Promotion Innovation (TPI)

8

Introducing

OFFER

INNOVATION


Promotion Technology Landscape

Plan with insight &

manage execution Measure results

Build promotion calendars,

simplify planning for account

managers, forecast impact,

and compare scenarios.

Manage workflow & update

forecast for final execution

Trade Promotion Planning

& Management (TPP/TPM)

Determine the best past

promotions after they

are run

Trade Promotion

Evaluation (TPE/TPO)

15

0 o

cta

ne

Find the best promotions

Digitally micro-test new

offer concepts and

identify the very best in-

store promotions

Offer Innovation


Thinking beyond price

Behavioral Economics &

Consumer Choice

Information framing Naïve diversification Numerosity

Affinity Anchoring


The result: 20-50% higher sales vs. traditional promotions

*Eversight client example, SKU X, Grocery

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

0 50 100 150 200

Ne

t C

on

su

mer

Pri

ce

Volume Sold

$1 off

(5%)

$2 off

(11%)

$3 off

(16%)

$4 off

(22%)

No

discount

$5 off

(27%)

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

0 50 100 150 200

Ne

t C

on

su

mer

Pri

ce

Volume Sold

$1 off

(5%)

$2 off

(11%)

$3 off

(16%)

$4 off

(22%)

No

discount

$5 off

(27%)

VS

“On-the-curve” results “Off-the-curve” results

Ne

t C

on

su

me

r P

ric

e

Volume Sold Volume Sold

$20

$19

$18

$17

$16

$15

$14

$13

Net

Co

ns

um

er

Pri

ce

$20

$19

$18

$17

$16

$15

$14

$13

0 50 100 150 200 0 50 100 150 200

Eversight Promotions Traditional Promotions


Identify the very best promotions by micro-testing thousands

Promotion

generation

Generate thousands of

promotions to test

Buy 4 get 1 FREE

Cola

Cola 2L bottles

Buy 4 for $5

Cola

Cola 2L bottles

3 for $3

Cola

Cola 2L bottles

Promotion analytics

& rollout

Identify the highest ROI

promotions to roll-out nationally

through brick & mortar channels

Buy 4 get 1 FREE

Cola

Cola 2L bottles

Adaptive micro-

testing

Micro-test with small groups of real

shoppers via digital platforms


Offer Innovation

http://vimeo.com/108531701


The real omni-channel opportunity

Web Mobile

Email Social


Digital to Brick and Mortar

• Tests of digital response to in-store

purchases conducted in April 2014

• Each dot represents a different test

cell: offer by region and

demographic cluster

• Sample size: 430,989

Over

Correlation

between online and

in-store activity

98%


Case Studies


Bundles that outperform the status quo

4552

59

124125128128134136

100

160

Product

C and D

Product

A and B

Save

$0.50 on

Product A

Product

A and K

Product

E and F

Product

G and H

Product

A and J

Product

A and H

Product

A and D

Product

B and L

Product

A and M

The client had already identified Products A and D as an “angel pair”, where when bundled together

outperform a base offer of their #1 SKU… Eversight validated this belief, while also identifying 6 other

combinations that performed even better

Consumer engagement (indexed)

Note: all bundles promoted as “Save $1 when you buy both”


We discovered new price points that exploit distortions in the demand

curve for a food category…

100

114

126127

145

0

50

100

150

$2.34 $2.75 $2.50 $2.22 $2.25

14% volume lift

compared to

$2.25

No loss in

volume

compared to

$2.25

90% confidence interval Customer engagement (indexed)


Region 3

Region 2

Region 1

…and we were able to slice the data across a series of geographic and

shopper segments

0.30

0.370.39

0.42

0.47

0.2

0.4

0.6

$2.25 $2.22 $2.50 $2.34 $2.75

1.241.41

1.571.76

1.90

1.0

2.0

$2.34 $2.50 $2.25 $2.22 $2.75

Overall

Redemption to allocation rate (%) Redemption to allocation rate (%)

0.060.110.090.09

0.11

0.0

0.2

$2.25 $2.75 $2.22 $2.50 $2.34

Buyers

Non-buyers

Redemption to allocation rate (%)


Eversight offers vs. control offer C

ontr

ol off

er

Volume lift (indexed)

Own Product Bundles Cross-Category Messaging 360 Other

After testing a battery of different Snacks promotions, Eversight identified a suite

of offers that were each better than or equal to the unit margin on the client’s “go-

to” offer, while each outperforming from a volume lift perspective.


In another retailer, we were able to generate a wide variety of insights

down to penny differences in price point

21

Test objective: Investigate penny price point moves on a high-volume commodity perishable item

Power of the “0.X9”

Across regions, large drop in

redemptions in move from $0.X9

to a penny higher

Once you raise price, raise it

Most volume loss happens with

initial move off the prevailing price

point

“Magic” price points

Able to identify kinks in the

demand curve where standard

elasticity does not apply

9.0

15.9

0

10

20

$0.60

-43%

$0.59

Redemption rate (%)

Regions 25, 29, 35

6.06.2

9.1

0

4

8

12

-3%

$0.55 $0.54

-32%

$0.59

Redemption rate (%)

Region 27

8.88.68.9

0

10+2%

$0.66 $0.64 $0.62

Redemption rate (%)

Region 25, 29, 35


Demo

DEMO

https://www.promolytics.com/promolytics/


Partnering with Periscope – a McKinsey Solution

Periscope Promotional Offer Innovation

• Offer concept ideation and support services

• Deep promotional expertise to design the most efficient experiments

• Broad-based process support and expertise for trade management and execution

• Facilitation of manufacturer – retailer collaboration

+

Eversight has partnered with Periscope to deliver support and services for promotional “Offer

Innovation.”

Periscope’s Preferred Offer Innovation Partner

Eversight’s Preferred Support Services Partner


For additional information…

Visit eversightlabs.com

collaborative promotion optimization · 2020. 3. 1. · digital to brick and mortar • tests of...

Documents