Originally Published on: QuantzigDetection and Analysis of Factors Impacting Product Cannibalization Using a Time Series Cannibalization Modeling Approach – Quantzig’s New Success Story

##Navigating Factors Influencing Product Cannibalization Through Innovative Time Series Modeling

In the dynamic landscape of business, unraveling the intricate dynamics of product cannibalization is paramount for sustained success. This case study from Quantzig explores the complexities of "Detection and Analysis of Factors Impacting Product Cannibalization Using a Time Series Cannibalization Modeling Approach." The narrative unfolds a strategic methodology for scrutinizing the impact of promotions and discounting strategies on existing product sales, providing businesses with invaluable insights to navigate the intricate terrain of product cannibalization.

Engagement Overview Collaborating with a major FMCG retailer in the United States, Quantzig swiftly delivered a product cannibalization measurement framework. This framework aimed to analyze the impact of promotions and discounting strategies on existing product sales. By harnessing advanced time series modeling, Quantzig empowered the client to assess promotions, measure ROI across product categories, and gain a unified view of their impact. This approach unearthed deeper insights into customer buying patterns and cross-product cannibalization, ultimately boosting sales and aiding in benchmarking product launches.

The Business Challenge In the fiercely competitive FMCG landscape, the client, a prominent US-based retailer, grappled with a significant sales decline attributed to product cannibalization. Challenges included inaccuracies in product categorization and the absence of a robust product cannibalization analysis framework. Quantzig's mission was to mitigate these issues and provide insights into promotions, ROI optimization, and customer buying patterns.

Quantzig's Approach Adopting a comprehensive approach, Quantzig leveraged FMCG analytics for precise demand transference insights. This involved crafting a robust product cannibalization analysis framework. By addressing out-of-stock issues and optimizing ROI across product portfolios, the tailored solution tackled the immediate challenges faced by the client.

Client Impact Quantzig's intervention led to a significant reduction in sales cannibalization for the client, accompanied by enhanced accuracy in product categorization. The new framework enabled proactive management of out-of-stock issues, resulting in improved ROI across diverse product portfolios.

Solution Offered

Challenges Breakdown:

• Strategic Deconstruction: Challenges were systematically broken down into three distinct units.
• Thin Coordination Layer: A slender yet robust coordination layer interconnected each challenge unit.
• Empowering Framework: The resulting framework empowered the client to gauge demand transference intricacies and their direct impact on overall ROI.

Enhancing Sales Execution Levers:

• Pricing Optimization: Fine-tuning pricing strategies for maximum ROI.
• Promotion Planning: Strategic adjustments to promotional activities.
• Distribution Optimization: Enhancing distribution strategies to optimize portfolio ROI.

Time Series Cannibalization Modeling:

• Historical Data Dive: In-depth analysis of historic sales data sets.
• Pattern Recognition: Identification of recurring sales patterns.
• Customer Behavior Analysis: Deeper insights into customer buying behavior across categories.
• Bounce-Back Rate Assessment: Accurate modeling of product launches' implications on marketing efforts.

Quantzig's Proprietary Solutions:

• Advanced Time-Series Models: Utilized proprietary time-series product cannibalization analysis modeling solutions.
• Historical Pattern Identification: Uncovered recurring patterns in historic sales data.
• Customer Behavior Insights: Analyzed customer buying behavior for strategic decision-making.
• Bounce-Back Precision: Accurately gauged bounce-back rates post-product launches.

Strategic Tweaks for Maximized ROI:

• Optimized Pricing Strategies: Fine-tuned pricing for enhanced portfolio ROI.
• Strategic Promotional Adjustments: Tweaks in promotional activities for greater impact.
• Distribution Optimization: Enhanced distribution strategies for maximizing overall ROI.

Value Delivered The devised product cannibalization framework empowered the FMCG retailer to:

• Devise a roadmap to gauge demand transference within product portfolios
• Estimate sales impact results with bounce-back rates
• Design data-driven pricing and promotional strategies to drive sales
• Leverage time-series cannibalization modeling to gauge the real dollar impact of new product launches on existing products
• Accurately model the short- and long-term implications of new product launches on the generated ROI

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