Understanding the effect of price and volume is one challenge, however, an understanding of profitability is crucial to the most effective planning of promotions.

Promax PX creates a profit/price/volume relationship for every product/customer combination.  It identifies the discount at which maximum profit can be achieved and that discount level at which the profit from the promotion is the same as that achieved by not discounting.

Knowledge of these parameters assists the account manager in pricing.  As every product has a different curve.  Promax also assists in identifying those products that may be included in a promotion that have no response to discount.

Using Promax’s powerful optimisation technology the business planner can test the effects of changing promotion parameters such as frequency, pricing strategy and return on investment to determine the business outcome they desire.

A range of scenarios can be created for any selection of products and these can be compared to assist in the development of a business strategy.

Causal factors within Promax are user-defined.  Customer store numbers and store size weightings are valid options.

An integral part of Promax is the ability to model the effect of promotional mechanics e.g. price, shelf-position, marketing spend on the forecasted uplift in sales volume. Full information on how this is done and the options around it are covered in the Promax white paper :  Modelling Multi-Causal Data in Promax PX