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How to effectively optimize promotions

How To Effectively Optimize Promotions

Promotions are a persuasive strategy to drive sales and the overall bottom line. Despite how powerful promotions can be for a business’s success, most retailers struggle with promotion management from inception to execution.


Historically, retailers found it challenging to promote the right items, at the right time, using the right price points. However, with the awakening of the omnichannel revolution, retailers have had to add another complicated strategy to the mix that focuses on the customer segment level.


To manage both mass and targeted promotions, most businesses rely on past experience and pure guessing – an optimization method that is no longer manageable with the unprecedented volume of data.


Tapping into an optimization strategy that utilizes advanced technology is the future for retailers.


Throughout this article, discover:

Table of Contents

What is promotion optimization?

Promotion optimization involves small or large adjustments to promotion attributes based on data-driven evidence. The purpose of optimizing is to maximize results.


A retailer may optimize by adjusting the:


  • Promotion Type (Simple/Complex)
  • Promotion Longevity and Timing
  • Promotion Vehicle (Circular, email, end-cap etc.)
  • Target Customer (Mass/Targeted/Market Segmentation)
What is promotion optimization

How do retailers optimize promotions?

Most retailers currently rely on manual processes and multiple systems for managing promotions. With the tools they have available, retailers optimize promotions by:


  1. Analyzing point of sale (POS) data
  2. Repeating past promotions that performed well
  3. Relying on gut feeling based on domain expertise
  4. Familiarizing with current trends, preferences, etc.

Though these methods work, they are not entirely foolproof and can be time-consuming. Today, with the amount of data available, and the need for personalization, optimizing promotion can be near impossible without having access to the right tools.

How do retailers optimize promotions

In a previous article, we touch on the magnitude of promotional complexity:


“When running a single promotion a retailer is faced with hundreds if not thousands of different decisions. Just imagine how difficult this gets when you look at a grocery store with over 50,000 items. Take a Grocery store with ~100 locations, they are faced with over 325 million decisions for mass promotions and 1.25 trillion decisions for targeted promotions.”


The number of decisions available to a retailer when planning promotions is indescribably huge. Even when tackling mass promotions (which is undoubtedly simpler than targeted promotions), it is near-impossible for a retailer to feel confident that they have made the optimal decision if they are relying on manual processes and outdated systems. That is why retailers today struggle with personalized promotions – the sheer amount of data to filter through in order to execute successfully is unrealistic.

Optimizing promotions with advanced technology

In order to effectively optimize promotions, retailers need to invest in advanced technology. A technology solution provides data-driven insights by processing all the data, running forecasts on different promotion attributes, and concentrating on the right combination of promotion attributes to meet the desired outcomes.


This level of complexity and accuracy gives retailers the space to focus on meeting their business objectives, rather than sifting through disparate data and relying on guesswork.

Optimizing promotions with advanced technology

Capabilities a solution provides:


  1. Run what-if analysis.
  2. Ability to optimize all types of promotions (simple and complex).
  3. Prescriptive recommendations that take into account business constraints and business objectives.
  4. Accounts for cannibalization and halo effects to better understand the impact of how other items or categories perform when a product is on promotion.
  5. Demand seasonality, post-promotion dip, and cross-items are taken into account.

Results retailers can expect:


  1. Better align promotions with business goals.
  2. Run promotions that carry the highest ROI to the business.
  3. Improve decision-making and execution between departments, and vendors.

Overall, a solution with optimization capabilities allows retailers to align promotions with their business strategy, achieve the highest ROI, and meet their customers’ needs. It is essential for retailers to invest in a solution that can process mass amounts of data and provide accurate and insightful recommendations.

Meet Cognira’s AI Promotion Solution

Cognira’s AI Promotion Solution addresses the entire lifecycle of promotion planning across merchandising and marketing organizations. This includes supporting in-store discounts and weekly circulars to online advertisements and customer-targeted offers – all informed by AI to maximize efficiency and ROI.


Part of Cognira’s solution focuses on optimizing promotions with AI-powered recommendations. The Promotion Advisor module allows retailers and wholesalers to gain access to powerful, what-if forecasting capabilities that simulate thousands of possible scenarios, resulting in maximum promotion optimization. This directly impacts sales, quantity, revenue, and margin.

What makes Cognira’s Promotion Advisor module stand out from the crowd:


  • AI-driven automated engine to optimize promotions faster
  • Real-time recommendations, assess trade-offs, and compare scenarios
  • Evaluate the opportunity and risk of new promotional strategies
  • Optimize all promotion types such as circulars, emails, in-store advertising, and customer-targeted promotions
  • Optimize vendor funds to negotiate the most effective deals

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