Promotional incrementality
Promotional incrementality is the share of sales during a promotion that would not have happened without it.
- Is
- The share of promotional sales that would not have happened without the promotion.
- Subtract
- Baseline sales, sales pulled forward from later weeks, and sales switched from other lines.
- Watch for
- Judging a promotion on promoted units alone. It always looks like a win.
Updated
Meaning / 01
What it means for retail and category teams
A promotion's volume is made up of new sales, sales pulled forward from future weeks as shoppers stock up, sales switched from other products the retailer sells, and sales it would have made anyway at full price. Incrementality isolates the first. Measuring it means estimating a baseline of what would have sold without the promotion, then accounting for the dip afterwards and the effect on neighbouring lines.
Stakes / 02
Why it matters
A promotion judged on promoted units alone will always look successful. Once pull-forward, cannibalisation and the discount on sales that would have happened anyway are counted, many promotions add little or cost margin. Incrementality is what separates the promotions worth repeating from those that only rearrange demand.
Example / 03
Illustrative example
The business and figures are illustrative. None of it is customer data.
| Pulled forward from next week | 400 |
|---|---|
| Switched from a rival sauce | 500 |
| Incremental | 1,100 |
Just over half the extra volume is new, and all of it sold at half price.
Read the example as text
A pasta sauce normally sells 1,000 units a week. During a half-price week it sells 3,000. The following week it sells 600 as shoppers use up their stock, and a rival sauce the retailer stocks drops by 500 units during the promotion. Of the 2,000 extra units, about 400 were pulled forward and 500 switched from the rival, leaving 1,100 incremental units, all sold at half price.
Related / 04
Related concepts
Next step
Look at the price gaps that matter
Bring a few products and competitors. We can walk through matching, observation dates and which gaps deserve a closer look.
