Operation Management

Demand
Group 12

Shaping
Bhanu Singh - 2021SMF6580
Shriansh Srivastava -
2021SMT6588
Surbhi Pareek – 2021SMF6501
Vidushee - 2021SMF6583
What is Demand Shaping

An organization’s ability to align supply and

demand is one of the most important measures
of profitability.
A better and more complete definition of
demand shaping is the process that makes the
most profitable demand and supply decisions by
using all of the available demand and supply
data.
If the demand for a product is expected to be
greater than supply, the supplier/customer may
shape the demand by increasing its price and/or
by cutting down the promotion.
The 01
Start by entering the what-if analysis in the system.
Typical data would include the expected demand

Process
uplift, pricing, and any costs associated; example,
executing a trade promotion campaign.

of Once the scenario is entered, users re-create the plan

Demand
considering all the constraints in the system. By re-
02 optimizing the supply plan (to maximum profit or
minimum cost) in context of the potential additional
Shaping demand, users can analyze and compare multiple
scenarios under “the best possible outcome.”

The re-optimized plan establishes the impact on

overall financial performance, product, and campaign
03 profitability. Users should be able to see P&Ls by
business unit and product, as well as the impact of the
campaign vs. a base plan.
The Typically, there will be deeper questions as to why the
impact is what it is. Root-cause analyses help

Process
determine the key drivers of performance. For
04 example, capacity availability may limit the ability to
fulfill additional demand or force the use of overtime

of or build-ahead, resulting in higher cost and lower

campaign profitability.

Demand If the scenarios are complex, users may allow the

system to select from multiple campaigns (full or

Shaping 05 partial) based on total profit impact; therefore,

reducing workload and leading to the best answer
quickly.

Finally, users should have access to opportunity

values (i.e., the net system-wide impact of selling an
additional unit of product or adding a unit of capacity).
06 Opportunity values provide unique insights to help
users identify further opportunity while significantly
reducing the workload.
Demand shaping tactics

new product sales

launches to boost promotions/deals
demand

price optimization dynamic pricing

E-commerce
Discount Pricing
Strategy
Most eCommerce websites often deploy discount
pricing when they want to generate more
conversions. But other goals associated with
eCommerce discount pricing strategy may include:

Acquiring new customers

Increasing sales
Increasing customer retention
Get rid of unsold or declining products
Promoting new products
E-commerce Discount Pricing Strategy
Product
Substitution
Product substitution is another common remedy for
supply-chain anomalies that are detected early.
For example, an organization can run a scenario
where a promotional program increases the
demand for their products.
The market response models would give the
expected uplift in demand and pricing.
That data, along with associated costs or any
other variables, would then be entered into a
what-if analysis system.
The scenario would be simulated and the results
would be compared to a baseline.
New customers
discount
(for Small
Businesses)
For small businesses
with lean profit
margins, handing out
discounts may not
seem like the most
logical marketing tactic
–but it works. Think of it
as a short-term
sacrifice that you can
use to push prospects
to choose your
product/service over
competitors.
Membership discount for
customer retention
If e-commerce marketers were to sit around a fire and share their worst fears or
nightmares, a low customer retention rate will be among the mentioned fears. It’s
difficult for eCommerce businesses with a low customer retention rate to stay
afloat because it costs way more to get new customers than to retain old ones.
Quantity/Volume
Discounts
Volume discount is a smart way of
convincing customers to purchase in bulk.
For instance, a clothing eCommerce
website that employs “steps” in its
quantity discounts can offer shoes at $10
each, five for $40, and 10 for $75.

Various marketing and promos such as

“buy one get one free and buy two and
get one free” are associated with the
concept of quantity discount. Quantity
discounts can also be used as a product-
focused tactic –especially when you want
to move out of the goods from the
warehouse. .
Thank You!