A Multi-dimensional Clustering on Fuzzy Metrics to Classify CPG Pricing and Price Promotion Strategies

Abstract

Price promotions, which are temporary price changes offered by a seller, play a crucial role in retail, especially in consumer packaged goods (CPG). Empirical evidence regarding the profitability of price promotion is controversial. Retailers are likely to have different pricing strategies for different category-brand combinations. The geographic aspect is particularly relevant, because the local competitive environment is considered a key determinant of the results of retailers’ strategy, and some evidence indicates that retailer strategies tend to be homogeneous in a given area. Price promotion is seen as the only tool that can drive an increase in sales in the short term, unlike advertising spending, which has long-term returns. The attractiveness of a price promotion is generally related to the magnitude of the discount versus the regular price. The dataset is particularly valuable, as it enables people to follow the brand positioning across multiple retailers and regions.