9 Promotion and Markdown Maintenance

The Promotion and Markdown Maintenance task is used to define promotional and markdown events and their associated sales lifts.

Figure 9-1 Promotion and Markdown Maintenance

Typical Business Users

The typical user of the Promotion and Markdown Maintenance is an Administrator who has business knowledge of the promotional and markdown events that occur throughout the year, markdown elasticity values, as well as the sales lifts associated with promotion and markdown discount percentages.

Data Requirements

Corporate promotional and markdown events
Price elasticity by Sub-class
Planned Markdown discounts
Planned Promotional discounts

Key Concept

This section describes a key concept for Promotion and Markdown Maintenance.

Price Elasticity

Price Elasticity is used to measure how changes in the price of an item affect the sales, or demand, of the item. The demand of an item is said to be price inelastic when there is not a large change in demand when the price changes. An item is said to price elastic when the demand for an item is greatly affected when the price changes. The value shows the percentage change in quantity demanded in response to a one percent change in price. It is calculated by dividing the percent change in sales by the percent change in price. For example, if the price of a microwave is raised by 20% and subsequently consumer purchases of this product drop by 25%, the microwave has a price elasticity of demand of 25% divided by 20%, or 1.25. This product would be considered highly elastic because it has a score of more than 1, meaning the demand is greatly influenced by price change. A score between 0 and 1 is considered inelastic, since variation in price has only a small impact on demand. A product with an elasticity of 0 would be considered perfectly inelastic, because price changes have no impact on demand.

Create the Promotion and Markdown Maintenance Segment

To create the Promotion and Markdown Maintenance segment:

Click Assortment Services in the Task menu. Then, click the Planning Administration activity and then the Promotion and Markdown Maintenance task.
The dialog to create New Plan opens. Click Create New Plan.
Enter the Plan Label in the text field. Click Ok.
In Select Product, select one or multiple sub-categories and click Finish.

The Promotion and Markdown Maintenance segment is built.

Step 1: Promotion and Markdown Maintenance

The Promotion and Markdown Maintenance step is used to define promotional events and lifts, as well as markdown lifts.

The steps to complete this process:

Define price elasticity by Sub-class for different markdown amounts.
Define markdown amounts, planned markdown discounts, and lift overrides.
Define promotion events, planned promotional discounts, and lift overrides.

Figure 9-2 Promotion and Markdown Maintenance Step

Prior to Starting this Step:

The Administrator should receive promotional and markdown events and the related elasticity and discounts for each event.

After Completing this Step:

Begin Curve Maintenance.

Tab and Views in this Step:

Promotion and Markdown Maintenance Tab:

Define Elasticity View

Define Markdown View

Define Promotion View

Promotion and Markdown Maintenance Tab

This tab is used to define elasticity, markdowns, and promotions.

Define Elasticity View

The Define Elasticity view is used to set price elasticity for each Sub-class.

The step to complete this process:

Enter the defined price elasticity for each Sub-class.

Figure 9-3 Define Elasticity View

Measure Table

Table 9-1 Define Elasticity View Measure

Label	Definition
Price Elasticity	User-entered value that displays the percentage change in quantity expected in response to a 1% change in price.

Define Markdown View

The Define Markdown view is used to set markdown discounts and override the calculated sales lift, if necessary, for each markdown amount and Sub-class.

The steps to complete this process:

In the Markdown Discount % measure, enter the appropriate value for each Sub-class and event.
Review the Reference - Markdown Disc Sales Lift% measure to see the system calculated sales lift associated with the Markdown Discount%.
Review the Markdown Sales Lift% to see the system calculated increase in sales that must occur to offset the decrease in price to sell the same dollar amount.
In the Markdown Sales Lift% (Override) measure, you may optionally override the markdown sales lift% by entering the appropriate values for each Sub-class and event.

Figure 9-4 Define Markdown View

Measure Table

Table 9-2 Define Markdown View Measures

Label	Definition
Markdown Discount %	The planned markdown percentage.
Reference - Markdown Disc Sales Lift %	The system calculated markdown sales lift based on the planned markdown for the amount and Sub-class.
Markdown Sales Lift %	The percent of increased sales that must occur to overcome the decrease in price to sell the same dollar amount. The lift in this measure is automatically calculated from the Markdown Discount % measure after calculating.
Markdown Sales Lift % (Override)	An optional measure used to manually override the calculated markdown sales lift percent. If an override is used, it will take the place of the system calculated value in the Item Planning segments.

Define Promotion View

The Define Promotion view is used to set the planned promotional discount and override the calculated sales lift, if necessary, for each Sub-class.

The steps to complete this process:

In the Promo Discount % measure, enter the appropriate values for each Sub-class and event.
Review the Reference - Promo Sales Lift % measure to see the system calculated sales lift associated with the Promo Discount %.
Review the Promo Sales Lift % to see the system calculated increase in sales that must occur to offset the decrease in price to sell the same dollar amount.
In the Promo Sales Lift % (Override) measure, you may optionally override the promotional sales lift % by entering the appropriate values for each Sub-class and event.

Figure 9-5 Define Promotion View

Measure Table

Table 9-3 Define Promotion View Measure

Label	Definition
Promo Discount %	The planned discount percentage of the promotion.
Reference - Promo Sales Lift %	The system calculated promotional sales lift based on the planned promotional discount for the event and Sub-class.
Promo Sales Lift %	The percent of increased sales that must occur to overcome the decrease in price to sell the same dollar amount. The lift in this measure is automatically calculated from the Planned Promo Discount % measure after calculating.
Promo Sales Lift % (Override)	An optional measure used to manually override the calculated promotional sales lift percent. If an override is used, it will take the place of the system calculated value in the Item Planning segments.