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March 2013

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Latest Release of Oracle Retail Demand Forecasting Offers Advanced Analytics for Promotional and Supply Chain Planning

Launched in December 2012, the latest release of Oracle Retail Demand Forecasting enables significantly more-accurate forecasts for products affected by planned promotions. These improvements in cross-product forecast effects will provide retailers with more complete supply chain visibility into inventory requirements to support profitable promotions.

“This release helps retailers calculate cannibalization and halo effects with a new degree of granularity,” says Andrea Morgan-Vandome, Oracle’s vice president, retail strategy and solution marketing. “As a result, you can quickly gain new insight into demand elasticity—the impact of promotions and pricing on sales—including negative cannibalization effects on similar or substitutable products and positive halo effects on related products.”

Improved Modeling Capabilities
New comprehensive modeling capabilities included in this release mine historical data to identify halo and cannibalization relationships and elasticity effects. In previous releases of Oracle Retail Demand Forecasting, promotional price effects were grouped into predefined categories such as low, medium, and high price change ranges. Within each of these ranges, the lift related to the promotional effect was calculated via a linear relationship.

With the latest release, Oracle Retail Demand Forecasting supports nonlinear, exponential promotional variables in order to more accurately model the promotional price elasticity that incremental variations in price can cause. For example, the difference in sales lift between a 10-percent-off and a 25-percent-off promotion can now be more accurately estimated and displayed to a marketer planning a promotion.

These new analytical tools deliver more-sophisticated results with a simpler implementation process. “You don't have to create rules or otherwise prepare the system to interpret the data. It takes the historical data as-is, and is able to derive the elasticity effects,” explains Morgan-Vandome. “And in fact, the system constantly gets smarter as new data enables more-accurate calculations.”

More Effective Promotions, Increased Supply Chain Visibility
The ability to predict promotional price responsiveness provides enhanced visibility into the impact of promotions on total category sales and profits. It also enables powerful what-if scenario analysis for promotions planners who want to maximize their promotional efficiency and effectiveness.

Just as importantly, retailers can gain more in-depth insight into future demands on the supply chain for promoted as well as nonpromoted products. As a result, they can achieve their sales and service levels goals while optimizing their inventory investments.

Get more details about Oracle Retail Demand Forecasting.

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