Promotion and Markdown Optimization Workflow

A typical LPO Workflow is as follows:

  • The buyer begins with a business strategy (for example, maximize revenue) and aims to determine when to offer a promotion, the appropriate discount depth, which items to include, and similar decisions related to markdowns, while considering business rules and inventory constraints.

  • Business rules are provided via interfaces and can be associated with a specific strategy (for example, a Christmas Sales strategy). A default strategy, DEFAULT_SET, is always available.

  • The application evaluates various price combinations for each item, factoring in the potential gains from offering a promotion or markdown. If customer-specific promotions (for example, Targeted Offers) are enabled, these are also considered. The system identifies the most effective pricing scenario that meets the defined optimization objective.

  • On a scheduled basis (typically weekly), batch runs are created and populated using business rules defined in the DEFAULT_SET strategy.

  • Once optimization is complete, item-level recommendations are moved to the Ready for Review status. By default, all batch run recommendations appear in the Manage LPO Recommendation screen.

  • A pricing analyst can review these recommendations, evaluating them at the item level. The analyst may choose to accept, reject, or override any recommendation.

  • Once the analyst completes the review, the item recommendations transition to Reviewed status. These reviewed items are then routed to the buyer for final action.

  • If the buyer agrees with the recommendations, they can Submit or Approve them. Both actions send the price recommendations to:

    • The export interface, and

    • A web service, which forwards them to a price execution system (for example, RPCS) with the respective Submitted or Approved status.

  • If a new set of recommendations is required, a what-if run can be initiated. This may involve modifying business rules or selecting a different strategy.
  • Once the what-if run is optimized and the results are satisfactory, the run can be finalized. Finalizing a what-if run replaces the batch run recommendations with those from the finalized run.

Figure 2-1 Markdown Promotion Optimization Workflow

This image shows markdown-promotion workflow.