CHALLENGE: EFFECTIVELY COMPETE AGAINST A MAJOR RETAILER WITHOUT SACRIFICING MARGIN
A regional supermarket chain needed to defend its market share against major big box retailers, which had been driving down prices in key markets. Their deep pockets allowed sustenance of this approach and enabled them to capture market share
SOLUTION: OPTIMIZE PROMOTIONAL PRICES TO DRIVE STORE TRAFFIC
A key component of the solution was AD-IN, Prognos’ weekly ad circular optimization tool. Using the regional chain's transaction and loyalty data, Prognos applied predictive analytics within AD-IN to identify key purchasing behaviors including visit frequency, basket sizes, price elasticity and promotion responsiveness. Solution features included:
- Price elasticity and demand curves to better understand shopping behavior, seasonality and pricing for Known Value Items.
- An optimization engine that calculates optimal product mix, price points and ad placements based on financial performance.
- Intuitive user interface that allows planners to enter business rules and constraints, as well as view results.
OUTCOME: IMPROVED PERFORMANCE OF ITS WEEKLY CIRCULAR AND UNCOVERED AN AVERAGE MARGIN INCREASE OF 8%
Optimized the regional chain’s weekly ad circular, identified 8% margin increase opportunities and enabled the retailer successfully defend its market position.