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PTP – Post Promotion Evaluation

Oracle PMO – VCP
Nov 2012
 Agenda

• Overview
• Worksheet & Series
• Customization
• Normalization

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 Overview
• Past promotions are evaluated to understand it’s effectiveness on
sales volume, revenue, & profitability
• Post Promotion evaluation helps company to strategize on future
promotion tactics, price points, & timings to improve revenue and
profitability.
• Projected volume, revenue, spending, profitability, & other metrics of a
promotion are archived typically when promotion is committed
• Archived projected numbers of a promotion are compared to the
posted actual (volume, revenue, calculated actual spending/matched
spend, profitability) after the promotion is executed and closed
• System provides “Normalization” engine functionality to help
understand the promotion effectiveness by decomposing historical
demand stream into Base and Lift (Direct & Indirect)

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 Agenda

• Overview
• Worksheet & Series
• Customization
• Normalization

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 Worksheet – Post Promotion
Evaluation

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 Series – Promotion Actual
• Ttl Evt Vol
• Total volume shipped during the promotion
• Historical Promotions
• Actual Shipments
• Future Promotions
• Shipment Forecast (Base + Lift)
• Incr Evt Vol
• Incremental volume due to the promotion
• Historical Promotions
• Normalized Shipment Lift
• Future Promotions
• Shipment Lift Forecast

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 Series – Promotion Actual

• Ttl Evt Value

• Total sales for the manufacturer due to the promotion
• Historical Promotions
• Actual Shipments * List Price
• Future Promotions
• Shipment Forecast (Base + Lift) * List Price
• Incr Evt Value
• Incremental sales due to the promotion
• Historical Promotions
• Normalized Shipment Lift * List Price
• Future Promotions
• Shipment Lift Forecast (Base + Lift) * List Price

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 Series – Promotion Actual
• Evt Spend exS
• Promotion spend excluding slotting cost
• Historical Promotions
• Total settled amount for the promotion from Oracle
Demantra DSM/External deduction system
• Can also be calculated but requires consumption history
• Vehicle/Fixed Cost + (Off Invoice + Bill Back
Allowance) * Actual Shipments + Actual
Consumption * Scan Down Allowance per unit
• Future Promotions
• Vehicle/Fixed Cost + (Off Invoice + Bill Back
Allowance) * Shipment Forecast + Scan Down
Estimate in Units* Scan Down Allowance per unit

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 Series – Promotion Actual

• CPIU
• Cost per Incremental Unit sold due to the promotion
• Historical Promotions
• Off Invoice and Bill Back Promotions
• Total settled amount for the promotion / Normalized Shipment
Lift in Units
or
• Evt Spend / Normalized Shipment Lift in Units
• Scan Down Promotions
• Total settled amount for the promotion /Normalized
Consumption Lift in Units
or
• Evt Spend/Normalized Consumption Lift in Units

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 Series – Promotion Actual

• CPIU
• Future Promotions
• OI and Bill Back Promotions
• Evt Spend / Shipment Lift Forecast in Units
• Scan Down Promotions
• Evt Spend / Consumption Lift Forecast in Units or Scan
Down Lift Estimate in Units
• % Spend
• Spending as a percentage of total sales during the promotion

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 Series – Promotion Actual

• Incr Mfg Profit

• Incremental profit to the manufacturer due to the promotion
• OI & Bill Back Promotions
• Historical Promotions
• Normalized Shipment Lift * List Price – Total settled amount
for the promotion – Normalized Shipment Lift * COGS
or
• Normalized Shipment Lift * (List Price - (Off Invoice Allowance
+ Bill Back Allowance) ) - Fixed/Vehicle Cost - Slotting Cost –
Normalized Shipment Lift * COGS
• Future Promotions
• Shipment Lift Forecast * (List Price - (Off Invoice Allowance +
Bill Back Allowance) ) - Fixed/Vehicle Cost - Slotting Cost –
Shipment Lift Forecast * COGS

© 2009 Oracle Corporation – Proprietary and Confidential 11

 Series – Promotion Actual
• Scan Down Promotions
• Historical Promotions
• Normalized Consumption Lift * List Price per Unit – Total
settled amount for the promotion – Normalized Consumption
Lift in units* COGS per Unit
or
• Normalized Consumption Lift * (List Price per Unit – Scan
Down Allowance per Unit) - Fixed/Vehicle Cost - Slotting Cost
- Normalized Consumption Lift * COGS per Unit
• Future Promotions
• (Consumption Lift Forecast * (List Price per Unit – Scan
Down Allowance per Unit)) - Fixed/Vehicle Cost - Slotting
Cost -Consumption Lift Forecast * COGS per Unit
or
• Scan Down Lift Estimate * (List Price per Unit – Scan Down
Allowance per Unit) ) - Fixed/Vehicle Cost - Slotting Cost -
Scan Down Lift Estimate * COGS per Unit

© 2009 Oracle Corporation – Proprietary and Confidential 12

 Promotion Evaluation - Scan Down
Promotions
• Consumption history is required to evaluate
effectiveness of scan down promotions accurately
• Following approach can be followed when
consumption history is not available
• Load Syndicated Lift & Base data from I.R.I or A.C.Nielson to
determine actual Promotion Spend, Manufacturing Profit, and
CPIU
• User entry series can be provided for users to enter Scan
Down Base Estimate and Scan Down Lift Estimate which can
be used to calculate projected promotional spend

© 2009 Oracle Corporation – Proprietary and Confidential 13

 Series – Promotion Projection

• Ttl Evt Vol P

• Projected total volume during the promotion
• Snapshot of “Ttl Evt Vol” series
• Incr Evt Vol P
• Projected incremental volume due to the promotion
• Snapshot of “Incr Evt Vol” series
• Ttl Evt Value P
• Projected total sales for the manufacturer during the promotion
• Snapshot of “Ttl Evt Value” series
• Incr Evt Value P
• Projected incremental sales to the manufacturer due to the promotion
• Snapshot of “Incr Evt Value” series

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 Series – Promotion Projection
• Evt Spend exS P
• Projected spend (Buy down + Vehicle Cost) for the promotion
excluding slotting cost
• Snapshot of “Evt Spend exS” series
• CPIU P
• Projected cost per incremental unit sold due to the promotion
• Snapshot of “CPIU” series
• % Spend P
• Projected promotion spending as a percentage of total sales during
the promotion
• Snapshot of “% Spend” series
• Incr Mfg Profit P
• Projected incremental profit to the retailer due to the promotion
• Snapshot of “Incr Mfg Profit” series

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 Agenda

• Overview
• Worksheet & Series
• Normalization
• Customization

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 Normalization

• Normalization is the process that aligns base fit and lift

forecast (direct, indirect, pre and post effect) to the
historical demand data (“quantity_form” parameter
expression) used by the engine to generate forecast

• Quantity Form = Fore_<Version#>_Norm +

Fore_<Version#>_Uplift_Norm + Fore_<Version#>_
SW_Store_Norm + Fore_<Version#>_ SW_Product_Norm
+ Fore_<Version#>_ SW_Channel_Norm +
Fore_<Version#>_ SW_Brand_Norm + Fore_<Version#>_
Pre_Effect_Norm + Fore_<Version#>_ Post_Effect_Norm

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 Normalization Cont’d

• Normalization feature provides visibility to the estimated

contribution of the promotional volume to the overall
sales volume
• Normalization works only on historical data & time
periods when engine executed in PE mode
• During normalization engine scales the components of
the Fit (Base, Direct Lift, Indirect Lift, Pre Effect and Post
Effect) to the demand data
• Baseline and uplift values are by their nature subject to
uncertainty. Normalization takes this uncertainty into
account by changing the components with greater
variance more, in order to balance it with the sales

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 Normalization Engine Parameters

• NormalizeResults
• Normalization feature is enabled by setting this parameter to 1 in
“INIT_PARAMS_X” parameter table

• NormalizationFactor
• Controls normalization behavior
• Two possible values
• 1 - No changes to baseline fit , all residuals added to lift fit
• 0 – Baseline and lift fit normalized according to normalization
algorithm
• Defaulted to 0

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 Normalization Example

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 Agenda

• Overview
• Worksheet & Series
• Normalization
• Customization

© 2009 Oracle Corporation – Proprietary and Confidential 21

 Required Customization – Post
Promotion Evaluation
• Requires custom process (custom level method) to
archive the promotion plan data (projected volume,
revenue, spend, CPIU…..etc) to the corresponding
projection series
• Series calculating Incremental Event Volume, Incremental
Manufacturing Profit, and CPIU should refer relevant
column storing normalized shipment/consumption lift
volume for the historical time periods

© 2009 Oracle Corporation – Proprietary and Confidential 22

 Quiz
• Which one of the following required to calculate spending for scan
down promotions?
• Shipment Forecast
• Booking Forecast
• Retailer POS/Consumption Forecast
• All of the Above
• Normalization feature will work when engine executed either in DM or
PE mode
• True
• False
• Does system provide standard process to archive projected numbers
for the promotion
• Yes
• No

© 2009 Oracle Corporation – Proprietary and Confidential 23

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