Tesco-owned data insight company DunnHumby is launching a new tool in the UK which it claims is capable of forecasting a year’s worth of sales based on different pricing and promotional strategies.
Dubbed Revenue Growth Planner, the tool uses DunnHumby’s customer demand model to simulate the likely effects of any modifications to either a product’s base pricing or associated promotional mechanics.
Employing an AI and machine learning algorithm, the tool uses two years of transactional data across billions of customer baskets, providing a realistic portrayal of shopper behaviours in the UK.
Unifying the predicted impact of pricing and promotional alterations to avoid “double counting” their impact, it is claimed Revenue Growth Planner is also able to assess how likely it is that a change in the price of one product will cannibalise sales of competing items.
The data powering the tool is updated weekly and takes account of seasonal and holiday-related sales variances, so users can spot developing consumer trends.
DunnHumby global proposition manager for pricing solutions Alex Reynolds said: “The reality of the consumer packaged goods market today is that even the slightest alterations to price or promotional strategy can have significant consequences for sales and loyalty.
“We designed Revenue Growth Planner to give brands clear, trustworthy insight into the short- and long-term implications of their go-to-market strategies.”
The company maintains that, with consumer behaviours changing rapidly due to continuing economic challenges, Revenue Growth Planner allows brands to experiment with pricing modifications in a virtual environment before setting them live.
Using advanced demand modelling capabilities refined over a period of 30 years, it is claimed the tool enables consumer packaged goods firms to forecast their volume demand for the coming 12 months based on different pricing and promotional scenarios.
Reynolds added: “Recent research (from McKinsey) suggests that price and value are the primary reasons that consumers choose to switch from one brand to another.
“With Revenue Growth Planner, we wanted to provide our customers with a simple and reliable way to understand how they can achieve the right positioning with shoppers in this challenging operating environment.”
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