Price Elasticity & Promo Effectiveness in Consumer Goods

In today’s climate of inflation and global uncertainty, grocery stores, supermarkets, and the broader consumer packaged goods (CPG) sector have become highly dynamic industries. Companies are navigating rapidly shifting consumer behaviors, where price sensitivity, discounts, and promotions are more critical than ever in influencing purchasing decisions.

As competition intensifies, brands are focused on strategic pricing and effective discounting to protect and expand their market share. Understanding price elasticity and promotion effectiveness has become essential for CPG companies aiming to stay competitive and meet changing customer needs amidst economic pressures.

The challenge faced by our CPG client in Greece.

• Optimal Pricing: Needed to determine the right price for their products that balances profitability with consumer affordability, especially as shoppers become more price-sensitive.

• Effective Discounting: Finding the best discount level—considering both the depth of the discount and the duration—is crucial for driving sales without eroding brand value or margins.

• Competitive Analysis: Staying informed about competitor pricing, promotions, and market positioning is essential to respond effectively and maintain a strong market share.

Our proposed solution

Leveraging sell-in data from sources like Circana and Nielsen, we’ve developed a cloud-based, ML-driven pipeline that analyzes extensive sales data to uncover key factors impacting sales performance. This pipeline identifies and quantifies the significance of these factors, offering a clear view of what drives sales growth and market share changes.

Key points:

• State-Space Machine Learning Approach: Our framework uses advanced state-space modeling to analyze sell-in data and identify key factors that influence sales, providing actionable insights into price elasticity, promotion effectiveness, and optimal discount levels.

• Interactive, Deep-Dive Tool: The cloud-based visualization tool allows clients to explore specific periods, pricing trends, promotional impacts, and discount strategies, offering a detailed view to refine decisions and boost market performance.

Our solution includes a cloud-based interactive visualization tool, allowing clients to seamlessly navigate, extract, and interpret insights. This powerful interface empowers clients to make informed, data-driven decisions with a comprehensive, real-time view of pricing, promotions, and competitive dynamics.