…ly to deliver a satisfactory ROI. There is also no need to try out potentially risky promotions, as the algorithm already simulates the potential outcomes of each promotion, and recommends the promotions that are extremely likely to boost sales and profits.
For a comprehensive look into the impact of a potential promotion, there are several variables that need to be taken into account, such as the amount of the discount, the type of product, price elasticity and competition from other retailers and promotions. There are also other factors like shelf placement and marketing techniques that are difficult to i…
…n which the number of parameters quickly overwhelms the human mind and even current software tools. Machine learning algorithms are able to create multiple decision trees based on a variety of sub-groups, before combining everything into a comprehensive predictive model that outputs sophisticated analysis and insights. After being sufficiently trained, the model can be trusted to make accurate predictions. This can be particularly useful for retailers seeking to study the potential impact of sales promotions.