Retail cost margins

Users in consumer product companies can usually only provide the cost to the retailers for their own products in a category, and not for the competitors' products.

The DemandTec by Acoustic applications need the cost data for all products in the category for optimizations and analysis. One way to calculate cost to the retailer is by obtaining margin percentage at the category, manufacturer, or brand levels and applying it to the retail price of the product in a store, which is available to DemandTec by Acoustic.

Costs can be calculated based on user-defined margins that are imported and edited in the Retail Cost Margin page. The Cost Margin data type is set up in an Excel file for import. Data that is imported will overwrite any existing data in this report. This data type can also be exported into an Excel file with the categories, manufacturers, and brands already populated with existing data. The cost margin values would then need to be added before importing it back into DemandTec by Acoustic.

In cases where the cost margin for the manufacturer or brand is not available, wild cards (*) denote that the margin applies to all items irrespective of manufacturer or brand. It is also possible to define margins such that specific brands for a manufacturer have specific margins while all other brands for that manufacturer have a manufacturer level default margin.

These are some examples of how margin percentages could be set up in hierarchies in the imported Excel file:

Example 1

  • Category - Division: TOOTHPASTE = 15%
  • Manufacturer: COLGATE = 10%, P&G = 12%, PRIVATE LABEL= 15%. This would be the likely choice for distinguishing private label (PL) margins from national brand margins.
  • Brand: CREST = 13%, ARMHAMMER = 16%, PRIVATE LABEL = 25%
  • Product: 6 oz Crest Whitening Toothpaste (UPC-1231312313) = 10%

Example 2

  • Category - Division: TOOTHPASTE = 15%
  • Manufacturer: '*'. The margin would apply to all manufacturers in the category- division.
  • Brand: '*'. The margin would apply to all brands with the above attributes.

Example 3

  • Category - Division: TOOTHPASTE = 15%
  • Manufacturer: COLGATE = 10%, P&G = 12%, PRIVATE LABEL= 15%. This would be the likely choice for distinguishing private label (PL) margins from national brand margins.
  • Brand: '*'. The margin would apply to all brands with the above attributes.

The cost calculation based on these margins is a separate process that runs automatically when models are exported and any time the modeling process updates the base prices. The cost calculation process can also be scheduled manually by choosing the Schedule Cost Margin Calculation task in the Task Scheduler.

Note: You must have the Enable Retail Cost Margin Management for CP permission to use this feature.