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Article by Mohan Babu

January sales: An innovative marketing strategy

Post-Christmas sales in the US are a unique marketing gameplan. Retailers and manufacturers have complex sales-forecast systems using a combination of statistical analysis, heuristics and forecasting models bundled into software packages, writes Mohan Babu

January in the US is the time of the year when all the Christmas presents have been opened and people heave a sigh of relief, having enjoyed another hectic holiday season. After Christmas get-togethers, people fly back from their parents or relative’s places and try to get back to their lives. Christmas is generally associated with the tradition of gift giving and most people exchange numerous gifts and goodies. Gifts are generally exchanged between relatives, friends, colleagues and co-workers with much anticipation and relish. This year saw the continuation of the tradition; even a slowing economy and the aftermath of September 11th did little to dampen the spirit of the holiday season. If anything, people were more resolved to let loose and enjoy themselves.

Most companies in the US also got into the holiday spirit and hosted holiday parties and bashes. Our company has an annual tradition of hosting a holiday dinner, which they continued even this year. This was really refreshing, especially since most other companies did away with theirs, citing ‘lack of budget’ as an excuse.

During Christmas, although it is customary to exchange gifts, expensive gifts are generally reserved for close friends and family. Gift giving, and more importantly receiving, is a kind of contradiction for most Americans because they are individualistic by nature, preferring to shop for their own goods and services. Hence, even though there is an element of sentimentality attached to gifts people receive, they do not balk at the prospect of taking the gifts back to the shop and exchanging them for something that they “really” want. This is especially true of gifts received from distant relatives who happen to give expensive gifts because they could afford them.

Supermarkets also facilitate exchange of unused gifts by making it really easy for consumers. Interestingly, when you happen to go to a superstore during December, the checkout person will automatically ask if you want a “gift exchange” receipt along with the item, the same way they ask if you wanted the item to be gift-wrapped. Most large stores in the US have a policy of giving refunds for any merchandise purchased, provided one can show the original receipts. In case of gifts, the giver may not be inclined to give the receipt with the gift, hence the concept of gift exchange receipt. This way, marketers are able to create a win-win situation for both the giver and receiver of gifts, in the process generating goodwill.

The flip side of all this gift giving, exchanges and returns is that it provides some consumers an incredible buying opportunity. Since most of the “hot” products are created especially for sale during Christmas time, immediately after the holidays, malls and superstores become anxious about disposing unsold inventory as soon as possible. This is especially true since the bulk of retail sales take place between October and December and marketers do not want to be laden with unsold inventory for months on end. In order to induce customers, “January Sales” are generally held by slashing prices with deep discounts and offering “zero percentage interest” rates. Savvy customers make sure that they do not spend all their savings on holiday purchases and stash away a part of their slush funds for just these kinds of sales. This year, the hot items on sale were DVD players and Microsoft’s Xboxes produced in anticipation of the holiday season.

Christmas sales are not the forte of marketing people alone. An interesting aspect of the sales is complex sales-forecast systems used by retailers and manufacturers. These systems use a combination of statistical analysis, heuristics and forecasting models bundled into software packages. Marketing gurus analyse reams of data to decide what will be hot and what not to stock on the shelves. For instance WalMart, one of the largest supermarket chains in the world is also the owner of the largest data-warehouse in the world. They are pioneering massive data mining to transform their supplier relationships. With the complex systems at their disposal, they capture point-of-sale transactions from over 2,900 stores in six countries and continuously transmit this data to the massive 7.5 terabyte Teradata data warehouse. WalMart allows more than 3,500 suppliers, to access data on their products and perform data analyses. These suppliers use this data to identify customer-buying patterns at the store display level. They use this information to manage local store inventory and identify new merchandising opportunities. Interestingly, even back in 1995, WalMart computers processed over one million complex data queries. Advent of e-commerce technologies and XML has made collaborative data sharing between retailers and suppliers a breeze.

As global trade becomes more prevalent, we are going to see an increased reliance on the use of sophisticated sales modelling and forecasting systems. Just as the supply chain wave has made most companies aware of the efficiencies that can be achieved by streamlining their production and supply chains, retail forecasting models are going to come into prominence, help retailers and global marketers





About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    For FAQ, Trivia and Information on Life in America, visit the Ask-A-Desi section

    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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