Promotion pricing system and method

• US 20020123930A1
• Filed: 11/15/2001
• Published: 09/05/2002
• Est. Priority Date: 11/15/2000
• Status: Active Grant

• Current Assignee: JDA Software Group Incorporated (Panasonic Holdings Corporation)
• Original Assignee: Manugistics Atlanta, Inc. (Panasonic Holdings Corporation)
• Inventors: Apps, Phillip David Reginald, Monteiro, Brian Lawrence, Boyd, Dean Weldon, Schwarz, Henry Frederick, Balepur, Prashandt Narayan, Nandiwada, Ravishankar Venkata, Guardino, Thomas Edward
• Granted Patent: US 7,072,848 B2
• Time in Patent Office: Days
• US Class Current: 705/14
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• CPC Class Codes: G06Q 30/0207 Discounts or incentives, e.g. coupons or rebates
• CPC Class Codes: G06Q 30/0211 Determining the effectiveness of discounts or incentives
• CPC Class Codes: G06Q 30/0244 Optimization
• CPC Class Codes: G06Q 30/0254 based on statistics

Abstract

The present invention provides a promotion pricing system and a related model for producing a value evaluation and recommendation for promotion on a targeted product so as to analyze, evaluate, improve, and design promotions to meet a user'"'"'s need. The promotion pricing system generates promotion price evaluations and recommendations for each product promotion related to a target product of a user along with associated competing products from the user and competitors. The user can be an individual, an organization, a corporation, an association or any entity providing, including activities related to making, selling, resale, offering for sale, distributing and other commercial conducts, products or service or both in the stream of commerce

In the preferred embodiment, the promotion pricing system of the presenting invention is comprised of modularization of the necessary analytical steps along with specifications for these modules. These modules cooperate to implement statistical market response estimation that provide statistically stable, fact-based information on customer response to a promotions. The modules further allow data capture to leverages enterprise and supply chain data sources. The modules include a product segmentation module, an incentive translation module, a customer segmentation module, a data aggregation module, a model selection module, a calibration module, an evaluation module, a constraints generation module, a cost structure module, an optimization module, a market channel performance module, and an alert module.

Claims

1. A method for evaluating a promotion scheme for a product, the method comprising the steps of:

creating a model of a market for the product;

collecting historical transaction data related to the product in the market;

analyzing the historical data and the model to determine a utility of the product without the promotion scheme; and

estimating the change in utility of the product from the promotion scheme.

2. The method of claim 1, wherein the utility of the product is determined through the sales volume of the product.

3. The method of claim 2, wherein the analyzing step uses a multiplicative model.

4. The method of claim 1 wherein the historical transaction data includes transactions of a competitive good.

5. The method of claim 4, wherein the utility of the product is determined through the market share of the product in comparison to the competitive good.

6. The method of claim 5, The method of claim 2, wherein the analyzing step uses an attraction model.

7. The method of claim 1, further comprising the steps of:

identifying a driving factor in sales of the product;

determining a future change to the driving factor caused by the promotion scheme;

during the analyzing step, correlating the sales trends of the product and historical changes in the driving factor; and

estimating a future change in sales of the product by associating the future change to the driving factor with similar historical changes driving factor.

8. The method of claim 7 where in the driving factor is a relative price for the product.

9. The method of claim 7 where in the driving factor is attractiveness of the product.

10. The method of claim 1 further comprising the steps of:

defining a business goal; and

using the estimated change in utility of the product to estimate the ability of the promotion scheme to meet the business goal.

11. The method of claim 10 wherein the business goal is the elimination of a current inventory of the product.

12. The method of claim 1 further comprising the steps of:

updating the historical data to include data from new sales; and

adjusting the estimated change in utility of the product in view of the new sales data.

13. The method of claim 1 wherein the promotion scheme is a first promotional scheme, and further comprising the steps of:

forming a second promotion scheme;

estimating the change in utility of the product from the second promotion scheme;

and comparing the changes in the utility of the product caused by the first and second promotion schemes.

16. The system of claim 15 wherein said model selection module selects between a mulitplicative model and an attraction model.

17. The system of claim 15 further comprising a constraint generation module.

18. The system of claim 15 further comprising an optimization module.

19. The system of claim 15 further comprising a market channel performance model.

20. The system of claim 15 further comprising an alert module.

21. The system of claim 15 further comprising a demand forecaster.

22. The system of claim 15 further comprising a market manager.

23. The system of claim 15, where in the system may be accessed over a distributed network.

24. The system of claim 16 wherein said distributed network is the Internet.

14. The method of the claim further comprising the steps of

forecasting future demand for the product without the promotion scheme;

and

using the forecasted future demand in estimating the change in utility of the product from the promotion scheme.

15. A promotion evaluation scheme comprising:

a product segmentation module;

a incentive translation module;

a customer segregation module;

a data aggregation module;

a model selection module; and

an evaluation module.

25. A program storage device readable by a machine, tangibly embodying a program of instructions executable by a machine to perform method steps creating a model of a market for the product;

collecting historical transaction data related to the product in the market;

analyzing the historical data and the model to determine a utility of the product without the promotion scheme; and

estimating a change in utility of the product from the promotion scheme, whereby the method step of estimating uses either a multiplicative or an attraction model.