Magazine: Tens of billions in promotional revenue – but how much comes from extra sales?

In Hungary from the sales of certain high-turnover categories more than 50 percent is realised in promotion. Do promotions generate extra sales or do manufacturers destroy value with the many promotions? Market analysis-based modelling can answer these questions. For instance in the processed meat category 50 of percent of the HUF 240-billion sales materialised in promotion last year. Nielsen’s experience is that promotions are successful if the following four criteria are met: 1. Setting realistic targets, 2. Optimising the promotional budget, 3. Competitiveness is maintained in pricing in non-promotional periods, 4. Investing in advertising and innovation. Promotions’ harmful side-effects can be prevented with careful preparation and implementation. Nielsen can also measure how efficient promotions are: How much from promotional sales comes from extra sales? When planning promotions, manufacturers need to know in advance what would happen if they changed the price of product. It is also useful if they are aware of what will happen if competitors follow their example and start selling their products in promotion. The main questions retailers are asking: Do promotions increase the number of customers? Which promotions elevate category sales the most? Which categories are over-promoted and which are under-promoted? Relying on available data, Nielsen can model all scenarios and analyse all possible effects to assist manufacturers and retailers in implementing successful promotions.