Case Study

Finding Results

Berkay Ertürk
Contents
Objective of the project
Data sources
Data preparation
Clustering choice
Continuing the data preparation and identifying top sale increases during promotions
A correlation matrix study before building the model
Final preparation before building the model
Model choice
Model development
Interpretation of model results (promotion impact on fast/slow items & stores)
Additional model 1 (using ProductGroup1 from the Assignment4_1c.xlsx)
Interpretation of the additional model 1
Additional model 2 (using ProductGroup2 as a subset of ProductGroup1 from the
Assignment4_1c.xlsx)
Interpretation of the additional model 2
Significant difference in item return rates (bonus part)
Validation on new data
The comparison between actual and predicted sales
Recommendations for improving model results
Recommendations to marketing department for future campaigns
Conclusion
Objective of the project
Objective: Measure the effects of promotions on sales and provide
recommendations for future marketing campaigns.

Language: Python.

Outcome:

Assess promotion effectiveness.

Provide insights for optimizing future promotional strategies.

Data sources
 Data preparation
1. The date columns in the dataset were converted to the datetime format.

2. To calculate the average weekly sales, a new column for the week number was added.
3. Negative sales (returns) were separated for later analysis. The analysis continued with
positive sales data.

4. For better presentation, negative sales were converted to their absolute values.

5. The weekly total sales amount was calculated.

6. The average weekly positive sales amounts for products and stores were calculated.
7. The average weekly positive sales amounts for products and stores were displayed in the console.
Clustering choice
Stores

Products
 After using k-means clustering

Stores Products
Continuing the data preparation
and identifying top sale increases during
promotions
8. The date ranges for the first four promotions were determined.

9. Sales data during the promotion periods were filtered.

10. The average sales for promotion and non-promotion periods were calculated.
11. The sales data for promotion and non-promotion periods were merged using inner join.

12. The promotion effect was calculated.

13. Grouped by product code and aggregated promotion effects. Then, examined the top 10
products with the highest sales increase.
 A correlation matrix study before building the
model
Is there a relationship between the promotion duration and effect?

It was desired to determine if the promotion duration had any effect on the promotion
impact.

The data includes only days with promotion durations of 7 and 8. Therefore, a
significant effect was not anticipated; however, it was decided to investigate it
nonetheless.

14. The promotion duration was added to the dataframe.

15. The final state of the combined_sales dataframe.
16. The relationship between promotion duration and sales was analyzed.

17. A correlation analysis was performed.

Conclusion: Low correlation

The correlation between Promotion_Effect and Promo_Duration is 0.008848, indicating that the
promotion duration has little to no effect on the promotion impact.
18. The correlation was examined by grouping according to product categories.

19. The correlation was examined by grouping according to store categories.

Conclusion: These values indicate that the relationship between Promotion_Effect and
Promo_Duration is very weak and not statistically significant across all categories.
Final preparation before building the model
Assignment4_1c dataset were added to the combined_sales dataframe

20. The ProductGroup1 and ProductGroup2 data from the assignment4_1c dataset were added to the
combined_sales dataframe.
Model choice
Why Ordinary Least Squares(OLS) Regression?

Simplicity and interpretability

Effective for moderate number of predictors

Widely accepted and used

Computational efficiency
 Model development
21. Before starting model development, the data types of the columns in the
combined_sales table were examined.

22. Categorical variables were converted to dummy variables, and dependent/independent

variables were identified. A constant was also added to the independent variables.
23. The model variables’ data types were checked and converted to float64.

24. The model was built.

Interpretation of model results
Promotion impact on fast/slow products/stores
25. The OLS regression results were examined.

Conclusion:

The fast groups were used as a reference:

Medium category products are most

positively affected by promotions.

Slow category products are negatively

affected.
Additional model 1
Using ProductGroup1
26. A new model was built, using the data from ‘assignment4_1c’

Assuming that ProductGroup1 represents a

product category

Firstly, a model was developed including

ProductGroup1.
Interpretation of the additional model 1

Conclusion:

The fast groups and ProductGroup1_A were used as a reference:

Medium category products are still most positively affected by

promotions.

Slow category products are negatively affected.

Group A products are the most affected by promotions.

Group C products are negatively affected.

Stores in the Fast Category are the most affected.

Additional model 2
ProductGroup2 as a subset of ProductGroup1
27. A new model was built, using the data from ‘assignment4_1c’

Assuming that ProductGroup1 represents a

product category, I considered that
ProductGroup2 could be an item within that
category.
Interpretation of the additional model 2

Conclusion:

When looking at the product details:

The product B18 is most negatively

affected.

The product C12 is negatively

affected.
Significant difference in item
return rates (bonus part)
28. The sales data during the promotion periods were filtered.

29. The negative sales amounts (returned products) during the promotion periods were filtered.

30. The negative sales amounts during non-promotion periods were filtered.

31. The return amounts from promotion and non-promotion periods were combined.
32. The return amounts for both promotion and non-promotion periods were calculated for products.

33. The return rates for both promotion and non-promotion periods were calculated for products.
34. The statistical significance of the difference in return rates between promotion and non-promotion
periods was tested using a paired t-test.

Conclusion: A statistically significant difference in return rates between promotion and non-promotion periods (p < 0.05).

The negative t-value indicates that return rates during promotion periods are lower than those during non-promotion
periods.

These results show that promotions not only increase sales but also reduce return rates.

One step further

What is the relationship between product segment
and number of returns during promotion periods?
35. The previous analysis was further detailed by examining the relationship at the
segment level. Return rates by segments are as follows:
36. The differences in return rates were examined.

Conclusion: In the previous analysis, it was found that promotions reduce the overall return
rate. Additionally, the impact of promotions on return rates varies by product segment.

Fast Segment: Returns increased during promotion periods.

Medium and
Recommendation: For Slow Segments:
products Returnspromotional
in the Fast segment, decreasedstrategies
during promotion periods.
should be reviewed, and the factors
contributing to the increased return rate should be investigated.
Validation on new data

37. The assignment4_1.b dataset was processed in the same manner as assignment4_1.a
(week number added, k-means clustering used, promotion duration included).
38. The only difference is that in this case, promo5 was used as the promotion date.
39. The new data was validated using the model developed in Additional Model 1.
The comparison between actual and predicted
sales
Conclusion:

In the first two examples, the predicted

sales are quite close to the actual sales.

However in examples 2 and 3, the

predictions significantly deviate from
the actual sales.
Recommendations
For improving model results

Data enrichment and feature engineering

Using more complex models

Evaluating and improving model performance

The clustering choice may need to be reviewed

Recommendations
To marketing department for future campaigns
Promotion Duration:

Recommendation: The promotion duration of 7 or 8 days is not significant for the promotion effect. Therefore, we do not need to be
concerned about having a promotion duration of 7 or 8 days for future promotion campaigns.

Medium Category Products:

Recommendation: Medium category products are the most positively affected by promotions. Allocate a significant portion of the
promotion budget to these products to maximize sales. Organize special campaigns and discounts for these products.

Slow Category Products:

Recommendation: Slow category products are negatively affected by promotions. Develop alternative strategies for these products, such as
promotional campaigns that highlight the value and features of the products.

ProductGroup1_A Products:

Recommendation: This product group is the most positively affected by promotions. Create special and attractive promotions for these
products to significantly boost sales. Consider seasonal campaigns and bundle offers.

ProductGroup1_C Products:

Recommendation: This product group is negatively affected by promotions. Review promotion strategies and develop alternative marketing
approaches. Campaigns supported by content highlighting product features and benefits may be effective.

Category_Store_Fast Stores:

Recommendation: Fast category stores are the most positively affected by promotions. Increase the number and variety of promotion
campaigns in these stores. Special events and campaigns in these stores can attract more customers.

ProductGroup_B18 & ProductGroup_C12 Products:

Recommendation: This products are the most negatively affected by promotions. Develop different marketing strategies for these products,
such as campaigns that emphasize quality and uniqueness rather than price. Work on improving the product's perception through customer
feedback and product reviews.
Recommendations
To marketing department for future campaigns

Overall Return Rate Impact:

Recommendation: Promotions have been found to reduce the

overall return rate. However, the impact varies by product
segment. Based on this information, segment-based strategies
should be developed to reduce return rates and increase customer
satisfaction.

Fast Segment Products:

Recommendation: Returns increased during promotion periods

for fast segment products. Reevaluate promotion strategies for
these products. To reduce return rates, consider providing more
information about the product, managing customer expectations,
and enhancing customer support during promotion periods.

Medium and Slow Segment Products:

Recommendation: Returns decreased during promotion periods

for medium and slow segment products. Continue and strengthen
current promotion strategies for these products. Since medium
segment products are the most positively affected by promotions,
consider more aggressive promotion campaigns for these products.
Conclusion
Objective:
Measure the effects of promotions on sales and provide recommendations for future marketing campaigns.

Languages and Methods Used:

Language: Python

Methods: Data loading and preprocessing, data clustering, regression analysis, model evaluation.

Key Focus Areas:

a. Criteria for Fast, Medium, and Slow Items

b. Criteria for Fast, Medium, and Slow Stores

c. Items with the Biggest Sales Increase During Promotions

d. Stores with Higher Promotion Reaction

e. Biggest Effect Explaining Sales Change During Promotions

f. Significant Difference Between Promotion Impacts of Fast versus Slow Items

g. Significant Difference Between Promotion Impacts of Fast versus Slow Stores

h. Measures used for goodness of fit

i. Evaluation of the model developed in step 1

Thank you for listening to me

Case Study
Finding Results

Berkay Ertürk