UCL School of Management is delighted to welcome Georgia Perakis, MIT, to host a research seminar discussing ‘Optimizing promotion planning; from vendor deals to pricing.’

Abstract

Promotions are a key instrument for driving sales for retailers. The promotion planning process is complex. It starts with vendor fund deals between manufacturers and retailers in order to encourage the retailer to promote their products. The next step of the process involves pricing, that is, when to promote, which items and how deeply to reduce their price. The final step involves scheduling what vehicle is best to use each time period to promote which item. Each of these steps of the process is a complex problem. In this talk we will discuss how to use optimization in these three steps. In particular, we will discuss the vendor fund selection problem the retailer is faced with, taking into account its impact on promotional pricing. We will propose a simple approximation for which we will establish analytical guarantees. Subsequently, we will discuss the underlying pricing problem through an optimization approach for determining promotions incorporating behavioural effects such as the post promotion dip due to stockpiling. We will illustrate that the methods we introduce are computationally efficient and “easy” to use in practice. We will also illustrate the performance of our methods using data through our collaboration with the Oracle Retail Business Unit and discuss the overall practical impact of our approach to Oracle RGBU clients.