Use of Data Science for Promotion Optimization in Convenience Chain

Abstract

This paper describes research being conducted in field of promotion planning and optimization for a chain of convenience stores. The motivation for choosing this subject is an important role of promotions in retail market and availability of large amount of data that can be used to improve profitability of promotions. In addition, most of existing studies analyzed promotions in super- and hypermarkets which have a different sales characteristic than a convenience chain. Since transaction amount is typically small (in comparison to transactions in bigger stores), we want to check whether findings from previous studies can be confirmed in our testing environment. In this paper, we show how both internal and external data can be used in order to improve accuracy of forecasts and obtain more reliable performance metrics. The thesis and research goals are presented along with key results of literature review.