Promotion P and L

What a promotion really leaves, once pantry loading and cannibalisation are deducted.

The reference

Everyday shelf price incl. VAT (€)

VAT (%)

Net cost price ex-VAT (€)

Use a point for decimals, e.g. 1.5.

The promotion

Discount depth (%)

Length (weeks)

Weekly volume without promotion, in units (the baseline)

Total volume sold during the promotion, in units

What the promotion shifts

Share of the uplift that is only a purchase brought forward, known as pantry loading or stockpiling by the shopper (%)

Share of the uplift taken from neighbouring lines, the cannibalisation (%)

Unit margin ex-VAT of neighbouring lines (€)

These two shares are measured with a control scope. Without one, they are assumptions, and the result inherits them.

Funding and costs

Supplier funding for the promotion (€)

Cost of running the promotion: leaflet, gondola end, labour, logistics (€)

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Net result of the promotion

Truly incremental volume

reading

Breakdown

Incrementality threshold

Observed uplift

Uplift required to break even

Effect of one unit of uplift

Detail per unit

Unit price, cost and margin without promotion and on promotion
Status	Price incl. VAT	Price ex-VAT	Cost price ex-VAT	Unit margin	Gross margin rate

Sensitivity

Discount depth, at constant promotional volume

Net result recalculated for five discount depths
Depth	Promo price ex-VAT	Unit margin	Net result	Change	Marker

Share of pantry loading, at constant depth and volume

Net result recalculated for five levels of pantry loading
Pantry loading	Volume loaded	Cost of loading	Net result	Change	Marker

What this calculation does not say

1. The baseline is an assumption until it comes from a control scope. An understated baseline turns a failure into a success.

2. Pantry loading and cannibalisation are parameters here, not measurements. Measuring them means tracking neighbouring lines and the following weeks.

3. No effect on the reference price is modelled. Repeated, a promotion shifts what the shopper considers the normal price.

4. The calculation holds at one line and one promotion. An annual promotional plan obeys other returns.