Sales Planning System Using Markdown Profiles

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Solution Overview

Problem

Merchants face challenges in managing seasonal products, as they need to minimize markdowns and ensure timely sales to avoid high losses, while existing methods rely heavily on manual intuition and result in reduced gross margins.

Innovation Solution

A system and method for planning sales using markdown profiles and sales patterns, which automatically adjust prices based on actual sales data, target sales quotas, and predefined pricing strategies to minimize markdowns and optimize inventory turnover.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Quantity of substance

If merchants apply markdowns to ensure complete sale of merchandise by end of season, then remaining stock is minimized, but gross margin is reduced

Engineering Contradiction:

Improveremaining stockVSAvoidgross margin

Core Design Contradiction:

Quantity of substanceVSLoss of energy

Solution Approach 1:

The system performs preliminary actions by pre-defining multiple markdown profiles with different markdown amounts and timing strategies before the sales season begins. These profiles are prepared in advance and can be automatically applied based on actual sales performance, eliminating the need for reactive markdown decisions during the season and enabling optimized pricing strategies to be executed beforehand.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system changes parameters by allowing dynamic adjustment of markdown amounts and timing through different markdown profiles. Each profile contains specific parameters for markdown percentage and applicable time periods, enabling the system to optimize the balance between clearing inventory and preserving margins by selecting the most appropriate profile based on sales performance.

Inventive Principle:

Principle #35Parameter changes

2Loss of energy

If merchants restrict markdowns to preserve gross margin, then profit is maintained, but risk of remaining stock increases

Engineering Contradiction:

Improvegross marginVSAvoidremaining stock

Core Design Contradiction:

Loss of energyVSQuantity of substance

Solution Approach 1:

The system implements feedback mechanisms by continuously monitoring actual sales performance against target sales quotas and automatically triggering appropriate markdown profiles when sales targets are not met. This feedback loop enables the system to respond to sales performance in real-time, applying markdowns only when necessary to prevent excess inventory while preserving margins when sales are proceeding as planned.

Inventive Principle:

Principle #23Feedback

Solution Approach 2:

The system introduces dynamics by making markdown strategies flexible and adaptive rather than static. Multiple markdown profiles with different characteristics can be selected and applied dynamically based on actual sales performance, allowing the system to adjust pricing strategies in response to changing market conditions and sales trends throughout the season.

Inventive Principle:

Principle #15Dynamics

3Ease of operation

If merchants use manual intuition for pricing decisions, then experience-based judgment is applied, but accuracy and efficiency of sales planning is reduced

Engineering Contradiction:

Improvemanual decision-makingVSAvoidsales planning accuracy

Core Design Contradiction:

Ease of operationVSMeasurement precision

Solution Approach 1:

The system enables self-service by automatically performing sales planning and markdown optimization without requiring manual intervention. The system autonomously monitors sales performance, compares actual results against targets, selects appropriate markdown profiles, and executes pricing decisions automatically, eliminating the need for manual judgment while improving accuracy through data-driven algorithms.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The system replaces the mechanical system of manual intuition-based decision-making with an automated computational system. Instead of relying on human judgment and experience, the system uses algorithms to analyze sales data, evaluate performance against targets, and determine optimal pricing strategies, thereby substituting manual operations with automated processing that delivers higher precision and efficiency.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

4Duration of action of stationary object

If merchants store remaining inventory for next season, then sales opportunities are extended, but storage costs increase

Engineering Contradiction:

Improveinventory storage periodVSAvoidstorage costs

Core Design Contradiction:

Duration of action of stationary objectVSLoss of energy

Solution Approach 1:

The system performs preliminary actions by establishing clear sales targets and markdown profiles before the sales season begins, enabling merchants to plan for complete inventory clearance within the current season. This advance planning reduces the likelihood of remaining inventory that would require storage, thereby eliminating future storage costs while ensuring optimal pricing strategies are in place from the start.

Inventive Principle:

Principle #10Preliminary action

Data Source

PatentUS8219444B2System and method for using sales patterns with markdown profiles

Publication Date: 2012.07.10 SAP SE

AI summary

A system, method and program product are provided for planning sales of one or more products or services. The method comprises selecting a markdown profile associated with the one or more products or services, selecting a sales pattern associated with the markdown profile, and distributing sales of the one or more products or services using the markdown profile and sales pattern.