Evaluate Trade Promotions
As an account manager, you can evaluate the efficacy of a promotional activity with the help of evaluation metrics. Based on these metrics, you can modify the promotional activity to meet your organizational targets.
To evaluate the performance of a promotion, select promotion and click the Summary subtab to view the figures for evaluation.
Calculate the metrics from the following examples:
To calculate these metrics, enter the baseline sales, projected lift percentage, and gross margin for individual promoted product.
Gross Sales
Gross Sales is the projected total sales amount with the promotion in effect.
Sum of (Effective Price for each item * Baseline * (1 + Incremental Lift %)) gives you the figure for gross sales.
Effective Price for each Promotion Item: List Price * (1 - Discount in Percentage) or List Price - Discount in Amount.
If there are multiple line items for the same promotion item, the calculation is additive on the original list price.
Incremental Sales
The projected additional sales amount with the promotion in effect compared to the projected baseline sales amount without the promotion in effect.
Gross Sales - Sum of (List Price for each item * Baseline for each item) gives incremental sales.
Incremental Profit
The projected additional profits with the promotion in effect compared to the projected profits without the promotion in effect.
Sum of (Effective Gross Profit * Baseline * (1 + Incremental Lift %)) - Sum of (Original Gross Profit * Baseline) gives the incremental profit.
Effective Gross Profit: Effective Price- Cost of Goods Sold. Cost of Goods Sold for each Promotion Item: List Price * (1- margin percentage).
Original Gross Profit: List Price- Cost of Goods Sold.
Trade Spend
The projected trade spending amount from all tactics from the promotion in effect.
Sum of All Fixed Promotion Metrics line items + Sum of (Discount for each item * Baseline * (1 + Incremental Lift %)) gives the trade spend.
Sum of All Fixed Promotion Metrics line items: Sum of tactic amount attribute value of all promotion product lines with fixed tactics such as advertising, merchandising, catalog and space.
Discount for each item: Discount amount per UOM for each promotion product line with variable tactics such as discount. If the discount method for the promotion product line is amount, the discount for each item is the value of the discount amount attribute. If the discount method for the promotion product line is percentage, the discount for each item is the value of the discount attribute.
Return on Investment
You can see the investment returns in percentage from the trade spend.
Incremental Profits and Trade Spend gives the return on investment.