Demand optimization

Demand optimization is the application of processes and tools to maximize <a href="/facts/Return_on_sales/Q1VWYQL0">return on sales</a>. This usually involves the application of mathematical modeling techniques using computer software.
It has particular applications in <a href="/facts/Retail/unzV9sPF">retail</a>, where merchants wish to identify the best combination of <a href="/facts/Price/yWQ8edfN">price</a> and <a href="/facts/Promotion_(marketing)/KFf2YwsC">promotion</a> to achieve desired sales, <a href="/facts/Gross_margin/xMlBlCU6">gross margin</a>, inventory or <a href="/facts/Market_share/kvXSlhlB">market share</a> objectives.
The methods used are similar to those applied in the related field of <a href="/facts/Supply_chain_optimization/gSpJdjIs">supply chain optimization</a>, where mathematical algorithms are applied to large databases of sales data to help <a href="/facts/Forecasting/pwFtGyzM">predict future outcomes</a>. In the case of demand optimization, as well as in house sales history, there may be competitive pricing information.
Because it is still a new field, authoritative data on the benefits of demand optimization is not widely available, although suppliers offer <a href="/facts/Case_studies/2gcfBbe6">case studies</a> of early adopters which claim rapid <a href="/facts/Return_on_investment/M8qYt4Yf">return on investment</a>, especially in the optimization of the timing and level of <a href="/facts/Price_markdown/P6SnVCEQ">price markdowns</a>.

Demand optimization open-in-new

Demand optimization