Trade Promotion Optimisation for Consumer Goods
Ankur Verma, Namrata Gupta
原文摘要
Trade promotions consume a large share of consumer-goods revenue, yet most planners still set discounts with a single, often unreliable, price elasticity per item. We present an end-to-end Trade Promotion Optimisation (TPO) system built as one chain: analogue SKUs, point elasticity, elasticity curve, price recommendation, promotional lift and net lift. Elasticity is measured at post-promo time from directional price-dip events against a rolling regular price, and at promo time by a causal estimator that residualises trend, seasonality and promotion, handles stock-out censoring with a Tobit likelihood and updates itself from the first clean promotion week. Items with weak evidence borrow the point elasticity and the curvature from analogue SKUs chosen by a cross-validated ridge model over category, brand, sub-category, price line and description. The optimiser separates self-price lift from substitution and post-promo dips and adjusts for inventory and trade funding. In a four-week promotion experiment on a 39-SKU consumer brand (mean elasticity -3.06), the plan lifts units by 20.6% and revenue by 6.9% at flat margin. Analogue pooling halves elasticity error relative to hierarchy averaging.
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