How Innovating Offers Leads to Radically Better Promotions

Transcription

Collaborat ive Promot ion Opt imizat ion
& Cont inuous I mprovement Summit
TPM-TPOCollaborat ive
Market ing
is BI GGER
in Dallas!
How Innovating Offers Leads to Radically Better
Promotions
How leading consumer goods companies such as BIC, Unilever, and AB InBev are able to
uncover more effective in-store promotions by digitally micro-testing thousands of offer
variations with real shoppers.
Promotion Optimization I nstitute • Fall Summit 2014 • Dallas, TX
Notice of Confidentiality
This document is strictly confidential and prepared for the purposes of
evaluating a potential license of Eversight, Inc.’s technology. None of its
contents may be shared without the express written permission of the
authors. Patents pending. All rights are reserved. Copyright 2014. Do not
duplicate. If you are not the intended recipient of this file please destroy
immediately and contact the author at +1 862 452 0650.
Strictly confidential. Do not duplicate. Do not forward. Copyright 2014. All rights reserved.
2
Speaker bio
David Moran, Co-Founder
• Global VP of Revenue Management for
Anheuser-Busch InBev nv/sa
• Leader in McKinsey & Company’s
Consumer Pricing Practice
• Led McKinsey’s early development of its
Trade Promotions Optimization software
for CPG
3
The consumer goods squeeze
Pressure to grow top line
Lower trade budgets
Underperforming promotions
Inadequate analytical tools
4
17%
50%+
25%
Trade rate in 2012
% promos lose $
Trade rate by 2016
The
$300B
Challenge
5
Sea of Sameness
6
What if you knew precisely which
promotions would work best before
running them?
What if you could be right every time?
7
Introducing Trade Promotion Innovation (TPI)
Introducing
OFFER
INNOVATION
8
8
Promotion Technology Landscape
Find the best promotions
150 octane
Digitally micro-test new
offer concepts and
identify the very best instore promotions
Offer Innovation
Plan with insight &
manage execution
Build promotion calendars,
simplify planning for account
managers, forecast impact,
and compare scenarios.
Manage workflow & update
forecast for final execution
Measure results
Determine the best past
promotions after they
are run
Trade Promotion
Evaluation (TPE/TPO)
Trade Promotion Planning
& Management (TPP/TPM)
9
Thinking beyond price
Information framing
Naïve diversification
Affinity
Numerosity
Anchoring
Behavioral Economics &
Consumer Choice
10
The result: 20-50% higher sales vs. traditional promotions
Traditional Promotions
Eversight Promotions
$20
$20.00
$19.00
$19
No
discount
$18
$18.00
VS
$1 off
(5%)
$17
$17.00
$2 off
(11%)
$16.00
$16
$15
$15.00
$3 off
(16%)
$14
$14.00
$4 off
(22%)
$5 off
(27%)
$13
$13.00
Net Consumer
Net Consumer Price Price
Net Consumer
Net Consumer Price Price
$20.00
$20
$19
$19.00
No
discount
$18
$18.00
$1 off
(5%)
$17
$17.00
$2 off
(11%)
$16
$16.00
$15
$3 off
(16%)
$15.00
$14
$4 off
(22%)
$14.00
$5 off
(27%)
$13
$13.00
0
0
50
50
100
100
Volume Sold
150
150
200
200
0
0
50
50
150
150
200
200
Volume Sold
Volume Sold
“On-the-curve” results
100
100
Volume Sold
“Off-the-curve” results
*Eversight client example, SKU X, Grocery
11
Identify the very best promotions by micro-testing thousands
Generate thousands of
promotions to test
Micro-test with small groups of real
shoppers via digital platforms
Identify the highest ROI
promotions to roll-out nationally
through brick & mortar channels
Buy 4 get 1 FREE
Cola
Cola 2L bottles
3 for $3
Cola
Cola 2L bottles
Buy 4 get 1 FREE
Cola
Cola 2L bottles
Buy 4 for $5
Cola
Cola 2L bottles
Promotion
generation
Adaptive microtesting
Promotion analytics
& rollout
12
Offer Innovation
13
Web
Mobile
The real omni-channel opportunity
Email
Social
14
Digital to Brick and Mortar
•
Tests of digital response to in-store
purchases conducted in April 2014
•
Each dot represents a different test
cell: offer by region and
demographic cluster
•
Sample size: 430,989
Over
98%
Correlation
between online and
in-store activity
15
Case Studies
16
Bundles that outperform the status quo
The client had already identified Products A and D as an “angel pair”, where when bundled together
outperform a base offer of their #1 SKU… Eversight validated this belief, while also identifying 6 other
combinations that performed even better
Consumer engagement (indexed)
160
136
134
128
128
125
124
100
59
Save
$0.50 on
Product A
Product
A and B
Product
C and D
Product
E and F
Product
G and H
Product
A and J
Product
A and D
Product
A and H
Product
A and K
52
Product
B and L
45
Product
A and M
Note: all bundles promoted as “Save $1 when you buy both”
17
We discovered new price points that exploit distortions in the demand
curve for a food category…
90% confidence interval
Customer engagement (indexed)
150
145
127
126
114
100
100
50
0
$2.22
14% volume lift
compared to
$2.25
$2.25
$2.34
$2.50
$2.75
No loss in
volume
compared to
$2.25
18
…and we were able to slice the data across a series of geographic and
shopper segments
Region 3
Region 2
Region 1
Overall
Buyers
Redemption to allocation rate (%)
1.90
2.0
1.76
1.57
0.6
1.41
1.24
1.0
$2.22 $2.25 $2.34 $2.50 $2.75
0.47
Non-buyers
0.42
0.4
0.39
0.37
0.30
0.2
0.11
0.09 0.09
0.11
0.06
0.0
0.2
$2.22 $2.25 $2.34 $2.50 $2.75
$2.22 $2.25 $2.34 $2.50 $2.75
19
Eversight offers vs. control offer
After testing a battery of different Snacks promotions, Eversight identified a suite
of offers that were each better than or equal to the unit margin on the client’s “goto” offer, while each outperforming from a volume lift perspective.
Volume lift (indexed)
Cross-Category
Messaging
360
Other
Control offer
Own Product Bundles
20
In another retailer, we were able to generate a wide variety of insights
down to penny differences in price point
Test objective: Investigate penny price point moves on a high-volume commodity perishable item
Power of the “0.X9”
Redemption rate (%)
Regions 25, 29, 35
20
Redemption rate (%)
Region 27
12
-43%
15.9
Redemption rate (%)
Region 25, 29, 35
10
-32%
+2%
8.9
8.6
8.8
$0.62
$0.64
$0.66
9.1
-3%
8
6.2
9.0
10
“Magic” price points
Once you raise price, raise it
6.0
4
0
0
$0.59
$0.60
Across regions, large drop in
redemptions in move from $0.X9
to a penny higher
0
$0.54
$0.55
$0.59
Most volume loss happens with
initial move off the prevailing price
point
Able to identify kinks in the
demand curve where standard
elasticity does not apply
21
21
Demo
DEMO
22
Partnering with Periscope – a McKinsey Solution
Eversight has partnered with Periscope to deliver support and services for promotional “Offer
Innovation.”
+
Eversight’s Preferred Support Services Partner
Periscope
Promotional
Offer Innovation
Periscope’s Preferred Offer Innovation Partner
• Offer concept ideation and support
services
• Deep promotional expertise to
design the most efficient
experiments
• Broad-based process support and
expertise for trade management
and execution
• Facilitation of manufacturer –
retailer collaboration
23
For additional information…
Visit eversightlabs.com
24

How Innovating Offers Leads to Radically Better Promotions

Transcription

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