The anniversary problem: why promotional calendars repeat themselves

Ask why a particular promotion sits in week 34 and the honest answer, in a great many consumer goods businesses, is that it sat in week 34 last year.

The Promotion Optimization Institute puts a number on it. Forty seven per cent of organisations still default to legacy anniversary-based planning. Nearly half of all promotional calendars are built by copying the previous year and adjusting at the margins.

Why anniversary planning persists

It survives because it is rational at the level of the individual planner, even when it is expensive at the level of the business.

A calendar built from last year's is fast to produce, easy to defend, and aligned with what the retailer expects because they are running the same process. It protects the volume phasing that the supply chain has already planned around. It avoids a difficult conversation with an account manager whose bonus depends on hitting a quarterly number. And it is almost impossible to be blamed for, because the outcome will look approximately like last year.

Building a calendar from performance, by contrast, requires evidence that each event earned its place, which requires a defensible baseline, which requires the competitor and promotional data to sit in the same analysis. That is a significant amount of work to complete inside a planning window that is usually measured in weeks.

What repetition costs

Three costs accumulate quietly.

Weak events become permanent

A promotion that underperformed last year is carried forward with everything else. Because it is never individually assessed, it never gets removed. Over several cycles the calendar silts up with events that exist only because they existed before.

Shoppers learn the rhythm

A promotion in the same week at the same depth every year is a schedule, and shoppers adapt to schedules. Demand shifts out of the full price weeks either side, which raises measured promotional lift and lowers realised price at the same time. The event looks increasingly effective in the report while the margin it returns falls.

The base becomes unmeasurable

Once a promotional pattern has been stable for several years, there is very little clean price history left. Estimating what the brand would sell at full price becomes an extrapolation from a shrinking number of unpromoted weeks, which weakens every elasticity and every baseline built afterwards.

A more useful starting question

Most reviews begin by asking which promotions performed well. That is the wrong first question, because it invites a comparison between events rather than a test of whether each event should exist.

Three questions are more productive.

• Which events would have been missed if they had not run? Not which delivered volume, but which delivered volume that the base would not have delivered anyway. The gap between those two is the entire value of promotional analysis.
• Which events cannibalised the weeks around them? An event that pulls forward four weeks of demand into one is a phasing exercise rather than a growth one, and it should be judged against a twelve week window rather than a promotional one.
• Which events exist because a retailer asked, and what was received in return? Some events are the price of a listing or of feature space. That can be a reasonable trade, but it should be booked as the cost of distribution rather than counted as a promotion that failed to pay back.

Changing the calendar without losing the room

The analytical part is the easier half. Removing an event from a customer's calendar means telling an account manager to have a conversation they would rather avoid, in a negotiation where the retailer holds a strong position.

Two things make that conversation more likely to succeed. The first is replacing rather than removing. A proposal that reinvests the funding from a weak event into a stronger one, or into a different mechanic in the same period, is a trading conversation rather than a cut. The second is arriving with the retailer's economics rather than only your own. The research suggests retailers are more receptive than manufacturers often assume, with 53 per cent open to new promotional tactics when the supporting data is strong.

Where automation earns its place

The binding constraint on promotional planning is almost never analytical capability. It is that a proper evaluation of every event in every customer in every category does not fit inside the planning window, so the team evaluates the largest handful and repeats the rest.

That is a volume problem rather than a thinking problem, which makes it the right kind of work to automate. When every event carries an incrementality figure and a return figure before the planning meeting starts, the discussion changes from which events anyone had time to examine, to which events deserve to survive.