Analysis of Customer Response to Simple and Complex Promotions

The value you convey to your customers is a key input into the success of achieving your promotion objectives.

As the Harvard Business Review states, “How customers perceive the price is as important as the price itself.”

For merchants, it is important to incorporate customer perception into promotion decisions to achieve plan objectives.

For example, your promotion objective may be to:

• Increase volume, revenue, or margin.
• Shift customer preference to profitable brands.
• Project value to customers while maintaining modest inventory levels.

To achieve these objectives you may ask yourself:

• How do I align promotion decisions with my objectives?
• Do I offer simple single-item markdowns or more complex multi-item buy-get and spend-get derivatives?
• Which one do I choose and how deep should I discount?