Measures the effectiveness of your merchandising. This measure tells you the % of promoted volume that you would not have sold if there was no promotion. Calculated as incremental volume/promoted volume. Higher is better. For example, if your efficiency is 10%, this means 90% of the volume you sold during the promotion would have been sold anyway, even without the merchandising.
What would it mean then, if your efficiency % was over 100%?
Thanks for the question! This is something that happens very rarely. Based on the sample data you sent us, part of the reason you are seeing merchandising efficiency over 100% is that you are looking at dollar sales. If you look at volume, I suspect the numbers will be quite different.
Something else to keep in mind is that there is always some noise in the incremental estimates (for a bunch of reasons that I won’t go into here). As long as there is a significant amount of promotion, that noise will get washed away. But the promotion levels are really low for most of the brands in the sample data you sent, so the noise is messing up some of the measures. The problem is more typically that people will see negative incremental volume (not positive incremental, which results in merchandising efficiency > 100%.). Your problem is sort of the opposite problem – you have too much incremental volume to attribute it all to promotion. If looking at volume instead of dollars does not help, here are a couple of ideas:
1) Focus in on a narrower time period where there was a specific promotion. Use that time period to calculate merchandising efficiency.
2) Keep your 24 week time period but say “Not Available” for brands where % of dollars on promotion is < 8% (or whatever cutoff you think makes sense). Hope this helps!
What is difference between promoted and incremental volume? Are they not same.
Thanks for your question! Incremental and promoted volume are not the same and that is one of the keys to understanding the impact of trade promotions. “Promoted” means that that the product was on sale with some type of merchandising. But some shoppers would have bought the product anyway, even if it had not been on sale. “Incremental” measures sales that are above and beyond what would have sold anyway because of the promotion.
Take a look at these other posts on this topic:
https://www.cpgdatainsights.com/pricing-and-promotion/non-promoted-sales-v-base-sales/
https://www.cpgdatainsights.com/measure-sales/subsidized-sales-missing-link/
https://www.cpgdatainsights.com/understand-your-database/incremental-volume-3-facts/
Hope this helps!
What is shelf?
How incremental,base,promotion and non-promotion factor are related to each other?
Here are some posts from the blog that I hope you find helpful:
If you are new to the CPG/FMCG industry and work for a company that has access to Nielsen or IRI data, you should definitely see what kind of training they have available, either in-person or online.
Hope this helps!
Hello,
What would it mean if the efficiency is over 100%? Would that mean that incremental vol outperformed promoted vol?
Thanks!
my efficiency that is over 100% is based on unit volume sales, account level, 13 week time period, and during a purposeful promotion my brand had. I’m assuming since I knew I had an aggressive promotion going on, then efficiency over 100% means the promo was a success?
I’m not sure how the Merchandising Efficiency can be over 100%. That would mean that more than all the volume that was on promotion was incremental. The only thing I can think of is that something else was going on with your brand beyond just feature, display and TPR. This could be some kind of specific shopper marketing activity with that account. The merchandising efficiency measure is intended to indicate performance of the trade merchandising only, not really other consumer marketing. Are you calculating the efficiency or is it available as a measure on your database? If you send me the actual data you are looking at I can take a look and let you know what may be happening. Please use the Contact Us link to email me and then I’ll respond with my email address.
Can you help explain the following headings from a Nielsen report?
% $ Any Promo
Any Promo CWW of %ACV
Feat or Disp CWW of %ACV
Any Promo Unit Price % Disc
Some of these measures are defined in our Glossary and all 4 reference specific merchandising conditions.
Take a look at this post which explains the merchandising conditions.
% $ Any Promo tells you the portion of dollar sales that went through stores that had some merchandising happening.
Here is an explanation of CWW. (You usually don’t see both CWW and %ACV in the name of a fact.)
% Disc is short for % Discount, which is explained here.
Is there a good way to visual representation of display effectiveness?
I generally use bar charts for promotion effectiveness. I would compare display list across products or time periods or accounts or possible compare display effectiveness to other types of merchandising. This post has lots of good tips and recommendations for charting various CPG data measures:
https://www.cpgdatainsights.com/communicate-insights/visualization-summary/