Merchandising and Marketing Converge
By David Dorf on Feb 02, 2009
In retail, the roles of merchandising and marketing have most often been separate, but in today's hyper-competitive landscape it's growing more important for the roles to collaborate, if not merge altogether. Merchants must always focus on maximizing gross margins, and effective use of promotions is a crucial lever. As you can see from the graphic below, advertising is an uncertain investment, so it's vital retailers make sure their advertising dollars are well spent. The recent announcement of DemandTec's acquisition of Connect3 reinforces that strategy.
Oracle's Promotion Planning and Optimization product already encompasses the features envisioned by this new marriage, so there's no need for retailers to wait. PPO uses promotional intelligence to measure past promotions in order to predict the effectiveness of future ones. It considers promotional lift, cannibalization, and halo-effect using well-tuned algorithms developed in our Cambridge office.
PPO's design allows merchants to perform what-if analysis to better understand and evaluate the results of a planned offer based on entry level price point strategies, the offer, or the marketing vehicle. Embedded item and market basket analysis ensures users have a combined view of the forecast in one solution. In addition, the solution provides a collaborative, centralized platform, which gives sharing capability between marketing and merchandising departments –enabling better and faster planning between internal teams. Merchants and designers also have the ability to graphically view ad space to determine best usage of content, and layouts to maximize profits per page. Forecasting the overall impact to department goals provides operational teams with a better upfront investment plan, to ensure all organizations are aligned before the promotional campaign is approved.
Software that both facilitates collaboration and maximizes promotion profitability is one way for retailers to squeeze more out of their promotions budget.