Determining the share of product categories on discount flyers based on the interaction effect between bargain scale and sales area

Abstract

In grocery stores, discount flyers act as an important tool to provide discount information to customers and spur buying motivation among them. However, discount flyer have limited space. As customers purchase popular products even if they are not actively promoted, mentioning them on discount flyers is an ineffective strategy. Therefore, the proper allocation of discounted products is an important topic which is related to category management. In this paper, we propose a prediction model for the number of purchased products based on the data obtained through radio frequency identification (RFID), point of sales (POS), and discount flyers. We propose a method to determine the share of product categories on discount flyers by evaluating the interaction effect between sales area and bargain scale using the prediction model. The experimental results show that the sales area near the register has a significant interaction effect on bargain sales, suggesting that discounted products should be arranged in front of the register.