Promotional planning is the process of optimizing marketing tools, strategies, and resources to promote a product or service to generate demand and meet set objectives. Artificial intelligence (AI) can be used to effectively plan promotional events, measuring their outcomes, and adjusting as necessary to achieve growth.
Studies have shown that as much as 72% of promotions fail to break even, despite millions invested in consulting and IT services. Here, the ability of a good AI model to adjust according to a company’s brand, product, target audiences, and previous experience promises positive outcomes and profit improvement from promotional events.
A model designed to analyze outcomes and improve results of promotion planning should utilize data such as inventory, sales, records of all types of promotional events, price, production volume, and data surrounding product launches as well.
A good AI promotional planning model should analyze promotions made by competitors in the same market and promotions in different markets, depending on whether the brand is a category leader or lags behind. The model should also focus on the timing and type of promotional events and compare them to the profits and growth gained by the companies.
Further data that could contribute to a good model includes weather, seasonal data, and analysis of social media and news outlets to find trends and significant events that could impact promotional plans.
Seeing as such a large percentage of promotions do not break even, the challenges of AI models in promotional planning are, first and foremost, the balance between generating business (new and returning customers) and protecting profits. It is also difficult to observe promotional campaigns of other companies to determine with certainty the exact effect of promotions compared to other factors that may affect sales and revenues.
Retalon is a company providing AI promotion planning services to many companies, including La Maison Simons and Hard Rock International.
“Retalon is also helping La Maison Simons optimize their promotions. The system suggests profitable promos and coordinates them with inventory management to ensure optimal levels in order to execute these promos effectively. … After introducing Retalon’s Planning, Purchasing, and Replenishment solutions Hard Rock’s retail business has experienced increased automation, improved decision-making capabilities, and lower inventory costs.”
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