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SAP Promotion Management for Retail

Part 1: PMR Business Process Overview

November, 2014
Objectives Slide

At the end of this lesson, you will be able to:


Understand the business process flow in PMR
Understand the PMR objects
Explain the business benefit of PMR

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Promotion Management - Goal

Support Planning
activities

Promotion data
available for supply
chain execution

Publish promotion:
Printed & distributed

Promotion
price at POS

Promotion data
available for reporting

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Promotions – different activities & timelines
Example

Start
Promotion Calendar, promo
Themes, Expression, sales
(financial) Targets, Coordination Printing
Targeted Groups & distribution
Marketing &
Advertisement
Changes

Promotion articles & , price


planning, sales forecast, what-if
Category analyses, Vendor Funding
Management

Procurement, allocation,
logistics
Supply Chain
Execution
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Promotions – different activities & timelines
Example

Start
PMR promo
Promotion Calendar,
Themes, Expression, sales
(financial) Targets, Coordination Printing
Targeted Groups & distribution
Marketing &
Advertisement
Changes

Promotion articles & , price


planning, sales forecast, what-if
Category analyses, Vendor Funding
Management

Procurement, allocation,
logistics
Supply Chain
Execution ECC
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PMR - Promotions Process Flow

Execute
Events, Templates, and
Advertising Advertising
Marketing

Build Promotion
Pricing
Calendar

Approve
(and Allocation/
Change) Replenishment
Offers, Vendor Funds,
Forecasting
Contract
Settlement

Category
Management
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PMR – Components Flyer

Theme

Validity Period

Nr. Pages
Articles / Article
Valid Stores Groups
Promotion
(Financial) Goals Construction & Price
Images
Selling Description

Page Structure Lay Out


(Layout)
Vendor Funding
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PMR – Components Flyer
Terminology

CAMPAIGN
Theme

Validity Period

Nr. Pages
Articles / Article
Valid Stores Groups
Promotion
(Financial) Goals Construction & Price
Images
Selling Description
EVENT OFFER
Page Structure Lay Out
(Layout) TEMPLATES
VENDOR FUND Vendor Funding
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PMR Terminology Overview

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PMR – Offer
What is an Offer?

Buy 2 of Product B,
pay $4

Buy 1 of Product A,
pay $2.49

Buy 1 of Prod.Grp X,
save $3

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PMR – Offer
Offer construction

PMR contains a flexible concept of creating different offer construction:

And Buy Product Discount Price


Or Get Prod. Group Discount Amount
Get Reward Hier.Node Discount Percent
Generic Regular Price
Display Free
Transaction Additional fields:
• Limit
• Enforce Multiple
• Minimum Amount
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Offer – Construction
Example 1

Buy 1 “Water 20x600ml” for $2.49

Buy 1 Product Water Promo 2.49


20x600ml Price

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Offer – Construction
Example 2

Buy 2 “Corn(5Tray)” for $4.00

Buy 2 Product Corn Promo 4.00


(5tray) Price
Customer buys (qty) – reg.pr=2.00:
1 2 3 4
2.50 4.00 6.50 8.00
Customer
2.00 4.00 6.00 8.00
pays (total)
2.50 4.00 6.00 8.00

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Offer – Construction
Example 2 – Enforce Multiple

Yes
the customer only gets the promotion when the quantity in the basket is a multiple of the “quantity” in the
offer. This is usually the case for European retailers

example: customer buys 1 regular price;


customer buys 2 promotion price;
customer buys 3 2 for promotion price + 1 for regular price

No
the customer always gets the promotion price, independent of how much the customer buys (the “quantity”
in the offer is only for marketing purposes. This is usually the case for American Retailers

Initial
once the first threshold is met, the customer will always get the promotion price, below the threshold the
customer has to pay the regular price

example: customer buys 1 regular price;


customer buys 2 promotion price;
customer buys 3 all for promotion price

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Offer – Construction
Example 3

Buy any of Prod.Grp. “HD IceCream” for $4.49

Buy 1 Product HD Ice Promo 4.49


Group Cream Price

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Offer – Construction
Example 3 (alternative)

Buy any of Prod.Grp. “HD IceCream” for $3.00 off

Buy 1 Product HD Ice Amount 3.00


Group Cream off

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Offer – Construction
More examples

Buy 1 prodA for promo price, limit 2

Buy 1 Carton prodB for $3 off

Buy 2 prodC for regular price, get 1 prodC free

Buy any of Prod Grp3 or buy any of Prod Grp4, get prodD 20% off

Buy any of Prod Grp1, get 20% discount on any of Prod Grp2

Buy for at least $100, get voucher of $5

Packaged offer: buy prodA and prodB for a total price of $10

….

Project Activity: which offer constructions are needed?

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Offer – Graphics (Preview)
Template: Block/Content

Once the offer has been constructed; a graphical representation (preview) can be made
(optional)

This Offer Preview uses the data from the offer (e.g. promotion price), but also attributes from
the article(s) used in the offer (e.g. image and selling description)

A template is used to map the right attribute to the right spot in the preview

Two types of templates are available in PMR:


• Block template
• Content template (optional)

Only “posted” templates can only be assigned to offers

Templates are re-usable and are usually set up once; Marketing can create and change
templates when needed

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Offer – Graphics
Templates (Block)

Image Image Image

buy Promo Promo Promo


Selling Description Selling Description Save Selling Description
Pr/EA Price Price Price

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Offer – Graphics
Templates (Content)

Image Image Image

buy Promo Promo Promo


Selling Description Selling Description Save Selling Description
Pr/EA Price Price Price

3 block templates
Image
vs.
1 block template
2 content template
Promo
Selling Description
Price
Advantage:
buy Promo Promo
Pr/EA Price
Save
Price ease of maintenance
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Offer – Graphics
Templates

• Offer has preview to show graphics

• Re-usable (Block) Templates to structure offer preview

• Re-usable (Content) Templates to support diversity and reduce maintenance

Project Activity: which block/content templates are needed?

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Offer – Other Functionalities

Offer Versions
• Differentiate offer content for group(s) of stores (e.g. price)

Forecast expected promotion sales (qty)


• Based on historical sales and offers (tactics / construction)
• Bottom-Up
• Override possibility

Offer Financials
• Detailed information on article/site and aggregate level
• 80+ KPIs
• Revenue / Profit / Margin / Save / Save up / Save from / …

Vendor Fund Assignment


• Vendor income
• Improve profitability

Status Management

Transfer to ECC
• Execution & follow up
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Offer
Screenshots

Offer Header

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Offer
Screenshots

Offer Construction

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Offer
Screenshots

Offer Financials

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Offer
Screenshots

Offer Preview

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Offer
Screenshots

Block Template

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Promotions Process Flow

Execute
Events, Templates, and
Advertising Advertising
Marketing

Build Promotion
Pricing
Calendar

Approve
(and Allocation/
Change) Replenishment
Offers, Trade Funds,
Forecasting
Contract
Settlement

Category
Management
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Campaign & Event
Overview Concept

Back to Christmas Campaign


Easter ‘15
School ‘15 ‘15 (Theme)

Flyer Radio Flyer Web Flyer TV In Store Event


(Expression)

Ofr1 Ofr2 Ofr3 Ofr4 Ofr5 Ofr6 Ofr7 Ofr8 Ofr9 Ofr10 Ofr11 Ofr12 Ofr13
Offer
(Art/Price)

Offer: grouping of articles Event: grouping of offers Campaign: grouping of Events

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Campaign & Event
Who does What

Marketing

Back to Christmas Campaign


Easter ‘15
School ‘15 ‘15 (Theme)

Flyer Radio Flyer Web Flyer TV In Store Event


(Expression)

Ofr1 Ofr2 Ofr3 Ofr4 Ofr5 Ofr6 Ofr7 Ofr8 Ofr9 Ofr10 Ofr11 Ofr12 Ofr13
Offer
(Art/Price)

Category Management

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Event
Steps & Time Line

Event header
• Description • Expression (tactic)
8 months out • Assign to Campaign
• Period
• Locations

Offer Creation & Maintenance


Event partitions
• Participating departments
6 months out • Open Partitions (e.g. Front Page)
• Financial Goals / partition

Area (Page) definition


5 months out • Total nr pages in flyer
• Sequence pages (department)

Area (Page) Layout


4 months out • Grid Layout of page (Area Template)

Offer-Event Assignment
3 months out
• 1 offer per block / page

8 weeks out Flyer Preview & Validation (on screen)

4 weeks out Transcontinental & Printing

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Event
Example

Event Header Name: Flyer December’14 Tactic: flyer Campaign: December’14


Validity period: week 50-51 All stores Sales Plan: 3mln / 20%

Front Page -> 1mln / 15% margin Grocery -> 2 pages -> 400k / 30%
Event Partitions Back Page -> 500k / 20% margin Meat -> 2 pages -> 750k / 10%
Bakery -> 2 pages -> 500k / 25%

Event Preview
P1: P2: P3: P4: P5: P6: P7: P8:
Area (Page) front back
bakery meat grocery
page page

Area Layout

front bakery meat grocery back


Event-Offer Assignment

Offers

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Event – Graphics (Preview)
Template: Area

A Page (Area) of a flyer contains 1 or more offers

To assign offers to the right spot on the page, an Area Template is required, to
structure the layout of the page

Marketing usually sets up these (re-usable) Area Templates in advance

Only “posted” Area templates can be assigned to an area (page) of an event


The difference between area templates and block/content templates is:
• Area template has a size, block template does not
• Area template has a tactic (type) assigned, a block template not
• Block/content templates have attributes assigned, an area template not
• Block/content templates are use in offers, Area templates in events

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Campaign
Screenshots
Step 0: Campaign

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Event
Screenshots
Step 1: Event Header

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Event
Screenshots
Step 2: Event Partitions

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Event
Screenshots
Step 3 & 4: Area (Page) Definition & Area Lay Out

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Event
Screenshots
Area Templates
2 block 4 block 2+4 block 6 block

4+6 block 1+2 block 1+11 block

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Event
Screenshots
Step 5: Offer Assignment

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Event
Screenshots
Step 6: Event Preview

zoom

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Event – Other Functionalities

Market Versions
• Different regions have different Event Lay Outs

Open Partitions
• “Bidding” for Front/Back page

Event Financials
• Event plan versus Offer Forecast

Event specific offer layout

Event Preview print (pdf)

Planning Workbench
• Workload / progress overview

Area of Responsibility
• Can only see the specifically assigned areas / partition

Area Template maintenance

Project Activity: which functionalities are needed?


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Promotions Process Flow

Execute
Events, Templates, and
Advertising Advertising
Marketing

Build Promotion
Pricing
Calendar

Approve
(and Allocation/
Change) Replenishment
Offers, Trade Funds,
Forecasting
Contract
Settlement

Category
Management
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Vendor Fund
Introduction

Purpose Vendor Fund: improve profitability offer

Vendor Fund = Vendor Deal

Vendor Fund Types:


• Scanback
• Fixed Sum
• Lump Sum

Total / Tiered Amount Scanback

Product & Product Group Assignment

Status Management

Assign VF to Offer

Offer can have multiple VFs assigned

VF can be assigned to multiple Offers

A Vendor fund can be transferred to ECC as a Condition Contract (depends on ECC release)

Project activity: how are Vendor Funds mapped from CoCo and utilized in PMR
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Vendor Fund
Example

Offer: buy 1 Häagen-Dazs for $4.49 Regular Sales Price: 7.49 / EA


Back Page goal: 20% margin Regular Purchase Price: 4.10 / EA
Regular Gross Profit: 3.39 / EA
Regular Margin: 45%

Promotion Sales Price: 4.49 / EA


Regular Purchase Price: 4.10 / EA
Promotion Gross Profit: 0.39 / EA
Promotion Margin: 8,7%
Does not meet BackPage target of 20%

Promotion Sales Price: 4.49 / EA


Vendor Fund Types:
Regular Purchase Price: 4.10 / EA
Scanback
Vendor Fund Scanback: 0.50 / EA
Fixed Sum
Promotion Gross Profit: 0.89 / EA
Lump Sum
Promotion Margin: 19,8%

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Vendor Fund
Offer Assignment

Vendor Fund
• Name Offer
• Vendor • Name
• Validity Period • Validity Period
• Locations • Locations
• Vendor Fund Type • Construction
• Fund Amount
• Products
• Products

Vendor Fund
Offer
• Name
• Vendor • Name
1+ product in common
• Validity Period • Validity Period
1+ location in common
• Locations • Locations
Offer period within VF period
• Vendor Fund Type • Construction
• Fund Amount • Products
• Products

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Vendor Fund
Screenshots

Vendor Fund Maintenance

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Vendor Fund
Screenshots

Vendor Fund – Offer Assignment (offer financials before)

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Vendor Fund
Screenshots

Vendor Fund – Offer Assignment

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Vendor Fund
Screenshots

Vendor Fund – Offer Assignment (offer financials after)

Without Vendor Fund $0,50 / PC Scanback:

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Vendor Fund
Screenshots

Offer Financials – Vendor Deal Impact

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Promotions Process Flow

Execute
Events, Templates, and
Advertising Advertising
Marketing

Build Promotion
Pricing
Calendar

Approve
(and Allocation/
Change) Replenishment
Offers, Trade Funds,
Forecasting
Contract
Settlement

Category
Management
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Modeling & Forecasting

Purpose Forecasting: Improve profitability Offers


• “What If”-Analysis

Forecast based on historical information


• Price Reduction elasticity
• Offers with similar construction
• Offers with similar tactics (expressions)
• Seasonal / Holiday effects

Bottom Up Quantity planning


• Forecast on product/location level
• Rolled up

Manual Override
• Forecast is kept in offer for comparison
• BADI override

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Modeling & Forecasting
Details Calculation

Advertising Seasonality, Retail POS


Pricing & Availability
& Incentives + Assortment + Trends & + (out-of-stock) Transactions
Holidays

Demand
Data
External /
Syndicated

IRI
Aztec

Other factors: Competition, Unexpected Events Data Volume: Billions of


transaction records

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Modeling & Forecasting
Details Calculation

Demand Modeling
Historical Demand Data + Historical Inputs (e.g. price) Demand Model Equation
Find the “best average” vs. input (signal beneath the “noise”)
q0 p v 2CN
D4 NT Av1QTK F2CKN e 1Q 2 N 1QTK
US ~
4 N ( z4 NT 1) 1

Forecasting
Demand Model Equation + Planned Inputs (e.g. price) Future Prediction
q0 p v 2CN
D4 NT Av1QTK F2CKN e 1Q 2 N 1QTK
US ~
4 N ( z4 NT 1) 1

Optimization
“A mathematical technique for finding a maximum or minimum value of a function of several
variables subject to a set of constraints.”
q0 p v 2CN
D4 NT Av1QTK F2CKN e 1Q 2 N 1QTK
US ~
4 N ( z4 NT 1) 1

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Modeling & Forecasting
Details Calculation

Short/Long Term
SAP Retail Promotions Planning

Forecasted What if
Units (price, discount,
tactics,…)

Modeling &Forecasting (DMF/UDF)


ERP
Prices,
Demand/ Modeling Forecasting Offer
Transaction (multivariate …
(what-if)
Data regression)
Stores/ Influence
POS Demand

Transactions

BW/CAR/
Other

Integration

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Modeling & Forecasting
Requirements

Recommendation: 2 years history


• Sales data
• Store
• Day
• Article
• Price
• Promotion ID
• Offer details

Accuracy Validation test


• Hold out test
• …

Tuning of Model parameters

Pilot Implementation

Project activity: how will Forecasting be implemented?

For more information on UDF, please see the UDF-RKT material

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Promotions Process Flow

Execute
Events, Templates, and
Advertising Advertising
Marketing

Build Promotion
Pricing
Calendar

Approve
(and Allocation/
Change) Replenishment
Offers, Trade Funds,
Forecasting
Contract
Settlement

Category
Management
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Business Process Map
Offer Simulation & Transfer to ERP
Master Data, Sales Assign Offer to
Manage Campaign and Forecasting. & BW and Export
& Offers and Image Event and
Infrastructure Event Planning See DDF to Desk Top
Load Perform Analysis
documentation. Publishing
Import Articles,
Prepare Article
Locations, Define Events Associate Offers Export Event
Groupings.
Hierarchies, Create Templates and Campaign to Blocks within Desk Top (DTP)
See DDF
Prices. See DDF Level Groups Areas Publisher
documentation.
documentation.
• Assign Location and
Create Product Dimension DTP
Integrate Images Product/Product Partition Event to Offer Negotiate Offer Accepts Export
(requires customer to
Group Attributes. (Optionally Plan • Construct Offer Assignment within (requires customer
build image import Terms and assign
service) See DDF Financials) Event to build DTP Export
Vendor Funds
docoumentation. service)
• (Optional Version Offers )

Import Historical • Create System


Assign Structured Forecast
Sales and Offers Define Tactic or Blank • (optional: Obtain 3rd Confirm Content
(initialization function).
Types and Tactics Party Forecast) or and Approval Transfer to BW
See DDF
Templates to
• Manually Assign
documentation Areas
User Projections

Store Groupings Analyze


Assign Partitions
and Master Promotional Preview of Transfer to ERP.
(Category/Sub-
Locations. Offers and Versioned Areas See DDF
Categories) to
See DDF Financial for Locations Documetnation.
Blocks
Documentation. Calculations

Compute Demand Marketing


Review, Edit, Accept
Models. Buying
Confirm Offer Promotional
See DDF
Content Offers for Event Advertising/Agency
Documentation.

Partner
Note: Many process steps are iterative, recurring processes e.g. considering Offers into Events,
Financial Analysis, Importing of Historical sales, Modeling and Forecasting … White space

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Summary Part 1

• Standard PMR Flow

• Campaign Theme / Grouping Events

• Event Expression type / Participants / Page Sequence & Structure / Preview

• Offer Construction / Preview

• Vendor Fund

• Templates Area / Block / Content

• Modeling & Forecasting

• Masterdata & Image

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Why PMR?

Business Goals:
• Gross Profit Increase offers / financial analysis
• Higher Efficiency Transcontinental Integration event / lay out preview
• Inventory Reduction (replenishment/allocation) forecast (offer-article-store)

Additional Benefits:
• Data entry error reduction
• 1 version of truth
• Immediate transparency
• Detailed reporting (planned vs actuals)
• Standard Integration

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Lesson Summary

You should now be able to:


Explain usage of PMR with promotion process
Explain standard PMR process steps
Understand purpose Campaign / Event / Offer / Vendor Fund
Understand functionality of templates
Explain the business benefits of PMR

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Next Steps

More information
Get acquainted with the integration section of PMR
Read the PMR chapters on help.sap.com
Visit the 3-day PMR training (W26PMR)

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