Promotional Optimization

Promotional activity is an important strategic lever for many retailers. However, promotional programs can be costly and complex, and it’s not always clear what is and isn’t having a positive impact. A clear playbook that defines the roles and rules for managing promotions is critical to ensuring that your promotional strategy is creating value. L.E.K. Consulting combines our proven approach, advanced analytics and industry expertise to help clients develop promotional strategies that drive real results.

Our approach

L.E.K.’s approach is grounded in the development of a client-specific fact base, generated by sophisticated analysis of historical promotional activities and outcomes, consumer surveying, and competitive benchmarking.

	Promotional diagnostic: Evaluate financials and perform data mining and inventory diagnostic of SKUs to assess performance and effectiveness of current promotional spend and tactics
	Consumer survey: Conduct consumer survey to segment target groups, understand purchase behaviors and promotional needs, and identify opportunities for increased response
	Competitive benchmarking: Research and assess competitor strategies to determine best practices and establish benchmarks for promotional effectiveness and performance
	Strategy development: Develop optimal strategy and promotional playbook to drive incremental value creation across key consumer segments

Client successes

• A national fashion retailer was seeking an advisor to address its issues of promotional effectiveness to increase sales, improve turns and sell-throughs, and decrease markdowns. L.E.K. helped the client set promotional strategy objectives, determine the effectiveness of various promotional activities by dimensions and create a promotional playbook of tactics to best meet objectives. The company saw a 200-basis-point impact on its gross margin within the first six months after the strategy had been implemented.

• A leading vitamin brand sought a partner to evaluate the impact of changing its promotion strategy and to conduct consumer research into the importance of promotions in the purchase process. L.E.K. ran consumer simulations on various pricing/pack/promotion configurations to develop a pricing strategy and identified a potential $20 million in direct contributions through a new pricing and trade promotion strategy.