Dunnhumby, the retail data science firm owned by Tesco, has launched a new tool that it claims is capable of forecasting the sales impact of changes to a product’s pricing and promotional strategy.
Revenue Growth Planner 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 a 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, 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, helping users spot developing consumer trends.
“The reality of the consumer packaged goods (CPG) market today is that even the slightest alterations to price or promotional strategy can have significant consequences for sales and loyalty,” said Alex Reynolds, Global Proposition Manager for Pricing Solutions at dunnhumby.
“We designed Revenue Growth Planner to give brands clear, trustworthy insight into the short- and long-term implications of their go-to-market strategies.”
With consumer behaviours changing rapidly due to inflation and other economic challenges, dunnhumby stated that its Revenue Growth Planner will allow brands to experiment with pricing modifications in a virtual environment before setting them live. Using demand modelling capabilities refined over a period of 30 years, the tool enables CPGs to forecast their volume demand for the coming 12 months based on different pricing and promotional scenarios.
“Recent research suggests that price and value are the primary reasons that consumers choose to switch from one brand to another,” said Reynolds. “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.”
