- Claim Date
- Entry Date
- Payment method
- Deduction Date
- Reference Number
- Transaction type
- Payee code
- Payee name
- Tax Type
So you have done your promotional planning, does that mean no more problems? Unfortunately not. It is still quite easy to end up with a severe overspend situation. This is because most promotions have no limit on the amount the chain may wish to buy. Why this should be so is one of those things that has become ‘part of the way we do business’, and has no basis in logic. It is just as illogical as extended buy periods, for businesses where there is perpetual motion and a pipeline of product! But it causes very real problems. Even with the most careful of planning, unless you monitor the trade spend during the year, you will almost certainly get a big surprise at the end of the year. Planning alone will not control trade spend. In this section we are not concerned whether the trade spend is worthwhile, only with keeping the total costs within predefined boundaries.
This is a precis of a research paper entitled ‘The Decomposition of Promotional Response: An Empirical Generalisation’ by David R. Bell, Jeongwen Chiang and V. Padmanabhan, published by Marketing Science.
This very interesting paper based on research conducted in 1999, studies 173 brands in 13 categories in the USA over a 52 week period, based on the household expenditure of 250 families and 3 stores. The overall conclusion is that the percentage of promotional lift attributable to brand switching is an average of 75%, which is somewhat below previous studies. In 1988 Gupta measured this at 84%, and A.C.Nielsen more recently (precise date unknown, but published in 1996) at 80%.
Of even more interest is the category by category variance. Categories were selected to encompass both those that are known to expand consumption, as well as those that are ‘storable’ or ‘necessities’.The balance of the lift not attributable to brand switching was also analysed into the two components of category expansion (genuine additional incremental volume) and accelerated purchase (reduction in expected inter-purchase interval). A determination was also made of the relative impact of brand factors, category factors and consumer factors to identify which is the most significant. All in all, they are able to explain 70% of the actual promotional response. One of the significant findings is that category effects are more significant than brand effects, and consumer effects (i.e. demographics) are quite minimal.
The Promax PX is a transactional solution, and changes to core information are recorded and date stamped – thus providing an audit trail. The solution also adopts double entry accounting principals – meaning that transaction changes are tracked through a series of corresponding debits and credits.