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Identifying the underlying structure of demand during promotions: a structural equation modelling approach

  • Usha Ramanathan
    ,
  • Luc Muyldermans
Research Output: Contribution to journal Article Peer-review

Abstract

It is widely recognized that promotions enhance product sales. Other factors such as seasonality, special days, customer preferences and economic factors may also have an impact on demand. Yet, endeavours to model the dependency of demand on various factors are scarce. We develop a conceptual demand-factor model to represent the dependency of demand on these factors. We examine and validate the conceptual model through structural equation modelling, using sales data of a leading soft drink company involved in supply chain collaboration with downstream retailers. We find that promotional and seasonal factors have a large and direct impact on sales, while special days like festivals and bank holidays have limited influence. Our approach is versatile and can assist demand planners in understanding the demand during promotional events, and in the planning and execution of promotional deals.

Publication Information

Output type

Research Output: Contribution to journal Article Peer-review

Original language

English

Pages from-to (Number of pages)

Pages 5544-5552

Journal (Volume, Issue Number)

Expert Systems with Applications (Volume 38, Issue 5)

Publication milestones

  • Published - 01/05/2011

Publication status

Published - 01/05/2011

ISSN

0957-4174

External Publication IDs

  • handle.net: 10547/251121
  • Scopus: 79151470469

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