Promotion Planning

A promotion has two lives, and where they sit with different teams, the second one gets discovered rather than planned. Commercially it is a mechanic – a price cut, a multibuy, a leaflet slot – judged on incremental volume and category margin. Operationally it is a demand spike several times baseline, landing in a fixed week and in specific stores, on items whose replenishment logic was calibrated on ordinary sales. Planning covers both: the forecast per item and location, the order that must leave the warehouse before it, and the exit plan for stock left when the promotion ends.

• Uplift – incremental volume above baseline, the number a promotion is actually judged on
• Cannibalization – demand pulled from substitutes and own‑brand alternatives rather than created
• Forward buying – shoppers stocking up at the discounted price, which suppresses the weeks that follow
• Post‑promotion dip – the trough afterwards, which a naive forecast reads as a fall in baseline demand

The recurring failure is a calendar agreed in commercial terms and handed to operations too late to order against. The consequences are symmetrical: a stockout on a promoted item with full advertising spend behind it, or overstock that turns into markdown once the price returns. Promotion planning that works keeps the promotional forecast separate from the baseline, plans in the same cycle as replenishment, and measures effectiveness afterwards per mechanic and per item rather than per campaign.

Promotion planning in practice

Logio plans promotions on separated baseline and promotional demand, so a campaign's uplift can be forecast per item and store and then converted into orders that arrive in time. Veritico PROMO covers the planning and the effectiveness measurement, STOCK carries the promotional forecast into replenishment – see promotion planning and effectiveness and demand forecasting and inventory optimization. Kofola raised promotion forecast accuracy to 76 % and cut expired stock depreciation by 14 %; Mondelez lifted overall forecast accuracy from 50 % to 70 %, which changed how promotion decisions were made.

Related terms

• Demand forecasting
• Sales and operations planning
• Assortment optimization
• Stockout
• Price elasticity of demand
• Bullwhip effect