twelfth · Glossary · Pricing
Promotional incrementality
Also called promo incrementality
Promotional incrementality is the share of sales during a promotion that would not have happened without it.
What it means for retail and category teams
A promotion's volume is made up of genuinely 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.
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.
Illustrative example
The business and figures are illustrative, not customer data
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 roughly 1,100 incremental units, all sold at half price.
Related terms
Related on twelfth.ai
- twelfth for merch analysts
Price, promo, range and space read off one line, with promotion results back before the next deal sheet is committed.