Sales Promotions

In the text below, you will find descriptions about how sales promotions are used within IFS Applications. To reach the section you are interested in, please use the following bookmarks:

General
Process Summary
Basic Data and Requirements
Define Sales Promotion
Calculate Sales Promotions
Examples of Sales Promotions and Calculations
Notify and Analyze Potential Sales Promotions
Analyze Performance of Sales Promotions

General

A sales promotion is a sales incentive offered by you as a supplier to your customers. You can use sales promotions as a business strategy in order to improve customer satisfaction, increase sales, increase visibility on the market, bringing customers to store, reduce inventory levels and many more reasons.

A sales promotion is used in order to reward a particular buying behavior e.g. Buy part A, get part B free of charge. The buying behavior is defined in the conditions as a minimum quantity or a minimum amount for specific parts or assortment nodes. The deal is defined as a discount amount, discount % or a special price and is given for defined promoted parts. The promoted parts are defined as a minimum quantity or minimum amount for specific parts or assortment nodes.

Sales promotions are applied to customer orders and sales quotations as negative charges. In the sales quotation, sales promotions are calculated to indicate the sales promotion benefits the customer will receive if all the quotation lines are converted to order lines belonging to a single customer order. 

Process Summary

In summary, the flow when managing a sales promotion can be described as follows:

  1. Define the sales promotion.
  2. Enter a customer order.
  3. Calculate and apply the required sales promotion.
  4. Analyze calculation in order to encourage the customer to buy more (optional).
  5. Print order confirmation (optional).
  6. Deliver.
  7. Invoice.
  8. Analyze the performance of the sales promotion.

Basic Data and Requirements

This section describes basic data that you need to enter in order to manage sales promotions. You must of course have the standard data for running the sales process: Customers, Sales Parts etc.

Assortment
If you want to use an assortment in a sales promotion, first of all you need to define your assortment.

Sales Charge Group and Type
Sales promotions are applied to customer orders as negative charges therefore a sales charge type must be connected to a sales promotion. When you create this sales charge type it must be connected to a sales charge group with category Promotion. When you define a sales charge type that should be used on a promotion it is possible to decided whether or not this charge should be printed on customer documents.

Note that price and tax on a sales charge type makes no sense, since the price is calculated by the sales promotion algorithm and the tax is inherited from order lines that are generating the sales promotion charge.

Campaign
 In a campaign you can offer goods to customers in three different ways:

  1. Deal per part.
  2. Deal per assortment.
  3. Sales Promotions (described in this document).

In alternative 1 and 2 above price and/or discounts offered are applied to the order lines from the start, while alternative 3 is applied conditionally depending on the buying behavior. Another difference is that alternative 1 and 2 are applied as a line price and a discount while alternative 3 is applied as a negative charge.

Apart from entering offered goods the campaign is an umbrella that keeps track of required and possible activities and data. For example you can enter a targeted site and a customer, connect allocation, connect supplier agreement etc. The following data must at least exist in the campaign in order to have a valid sales promotion: status equals approved, sales period, targeted sites and customers.

Define Sales Promotion

As mentioned earlier sales promotion is a subset of the campaign. In other words a campaign must be entered before defining a sales promotion.

A sales promotion consists of three different elements: deal, buy conditions and get conditions. In the picture below you can see how these elements are related to each other:

1 - Deal
2.1 - Buy condition 1
2.2 - Buy condition 2
3.1 - Get condition 1
3.2 - Get condition 2

The campaign has one or many connected sales promotion deals. The deal has one or many buy conditions which define the required buying behavior and one or many get conditions which define the promoted parts you need to order. With this structure you can define sales promotions like "Buy according to buy condition 1 and 2, get deal for order lines corresponding to get condition 1 and 2".

In the deal you define the offer as a certain discount %, discount amount or a special price. Discount amount and price can be with or without tax. In the deal, you also enter a description, a charge type to use, and whether or not the user should be notified about the deal when entering a customer order or sales quotation.

Through connecting buy conditions to the deal it will be possible to define the buying behavior that will trigger the deal. Buying behavior defined through buy conditions, concerns a part selection (assortment node or sales part) and a minimum quantity or amount. The amount can be enter as a gross or net.

In the get conditions it is possible to define for what part selections (assortment node or sales part) and quantity or amount that the offer should apply to. The amount can be entered as a gross or net.

For each buy and get condition part or assortment node must be entered. Besides quantity, net amount or gross amount must be entered for each buy and get condition. There is one exception and that is when discount % is offered in deal you have the possibility to define get conditions without quantity, net amount or gross amount. Then the discount applies to entire part selection.

Below you can see some examples of how sales promotion can be defined in this structure:

Example 1: “Buy 10 pencils, get 2 erasers for free“:
Deal: Price = 0 EUR
Buy conditions:
        - 10 pieces of Pencils
Get conditions:
        - 2 pieces Erasers

Example 2: "Buy 3 shirts, get 1 for free (solved via price = 0)":
Deal: Price = 0 EUR
Buy conditions:
        - 3 pieces of Assortment SHIRTS (promoted shirts connected to this assortment)
Get conditions:
        - 1 piece of Assortment SHIRTS

Example 3: "Buy 4 shirts, pay 10 EUR":
Deal: Price = 10 EUR
Buy conditions:
        - 4 pieces of Assortment SHIRTS
Get conditions:
        - 4 pieces of Assortment SHIRTS

Example 4: "Buy 3 shirts, get 25 EUR discount":
Deal: Discount Amount = 25 EUR
Buy conditions:
        - 3 pieces of Assortment SHIRTS
Get conditions:
        - 3 pieces of Assortment SHIRTS

Example 5: "Buy 10 pencils, get 3 EUR discount on 3 erasers":
Deal: Discount Amount = 3 EUR
Buy conditions:
        - 10 pieces Pencils
Get conditions:
        - 3 pieces Erasers

Example 6: "Buy 100 EUR of anything, get 10 EUR discount":
Deal: Discount Amount = 10 EUR
Buy conditions:
        - 100 EUR of Assortment ALL (all parts connected to this assortment)
Get conditions:
        - 100 EUR of Assortment ALL

Example 7: ”Buy 1 racket and 4 balls, get 20 % discount”:
Deal: Discount % = 20 %
Buy conditions:
        - 1 piece Racket
        - 4 pieces Balls
Get conditions:
        - 1 piece Racket
        - 4 pieces Balls

Example 8: "Buy 3 shirts, get 1 for free (solved via 100 % discount)":
Deal: Discount % = 100
Buy conditions:
        - 3 pieces of Assortment SHIRTS
Get conditions:
        - 1 piece of Assortment SHIRTS

Example 9: "Buy tools for 1000 EUR, get 10 % discount on these tools":
Deal: Discount % = 10
Buy conditions:
        - 1000 EUR of assortment TOOLS (promoted tools connected to this assortment)
Get conditions:
        - 1000 EUR of assortment TOOLS

If you fulfill buy condition you get 10 % discount in multiples of 1000 EUR.:

Example 10: "Buy tools for 1000 EUR, get 10 % on tools":
Deal: Discount % = 10
Buy conditions:
        - 1000 EUR of assortment TOOLS
Get conditions:
        - assortment TOOLS

If you fulfill the buy condition you get 10 % discount on every part that belongs to assortment tools.

Calculate Sales Promotions

When a customer order is entered you can calculate the sales promotions for a customer order. Sales Promotions can be calculated either by releasing a customer order or by using the right mouse button option in the customer order header. As long as nothing is invoiced on a customer order it will be possible to do a new calculation of sales promotions. The entered lines are the basis for the calculation i.e. no extra lines are added automatically due to the sales promotion feature.

Sales promotions can be calculated in the sales quotation in order to communicate the sales promotion benefits to the customer. Note that sales promotion charge lines are not carried on to the customer order when customer orders are created from the sales quotation.

In summary what the algorithm does is to find how many times a deal can be utilized and then apply this deal as a negative charge on multiple number of instances. The number of times, that a deal can be utilized depends on how many times the buy conditions are fulfilled and how many times the get conditions are ordered. The least value of times is limiting how many times the entire deal can be utilized.

Below you can see a more detailed description of the algorithm for calculating sales promotions:

  1. Remove earlier applied sales promotions.
  2. Check if there exist any campaigns and deals that customer order is qualified for.
  3. Evaluate the combinations of campaign and deals from step 2, the campaign with the highest priority, is evaluated first, if no priority exists, the campaign that was entered last is evaluated first and within a campaign the deal with the lowest ID is evaluated first.
  4. For combination of campaigns and deals evaluate the buy conditions:
  5. For combination of the campaigns and deals evaluate get conditions:
  6. For the campaign and deals decide the number of times  a deal can be utilized by taking the least value of times the deal is fulfilled and the number of times the deal is ordered. Take only the integer since deal only can be utilized in even multiples.
  7. For each get condition in the deal allocate the required quantity and the amount from the order lines for one utilization. It will allocate the cheapest lines first.
  8. The calculation for the charge price will occur according to the table below:
    Type of offer in deal Calculation of the charge price
    Discount % Charge price excluding tax = - Discount percentage entered in the deal of net amount for order lines allocated in current utilization.
    Discount Amount including tax Charge price including tax = - Discount amount including tax entered in the deal
    Discount Amount excluding tax Charge price excluding tax = - Discount amount excluding tax entered in the deal
    Price including tax Charge price including tax = Price including tax in the deal - sum of gross amount for the order lines allocated to the current utilization.
    Price excluding tax Charge price excluding tax = Price excluding tax in the deal - sum of net amount for the order lines allocated to the current utilization.
  9. If customer benefits from deal (i.e. Charge Price < 0) apply sales promotion charge. Charges should be grouped by deal and charge price. This is done by searching for charges connected to the same deal with the same Charge Price and add one more to the charge quantity, if such a charge line does not exist a new charge line is created. A reference to campaign and deal is added on the charge lines.
  10. Repeat step 7 as many times as the deal can be utilized.
  11. Repeat from step 3 for the next combination of campaigns and deals.

Note that an order line can only be basis for generating sales promotion charge for one deal. The deal is rejected if any connected order line is already basis for generating sales promotion charge for other deal.

Note that in order to receive a sales promotion all the order lines connected to a deal must have the same tax set-up. The reason for this is that only one tax set-up can be inherited to  a sales promotion charge. The deal is rejected if any connected order line does not have the same tax set-up.

Note that the order line with the net price, items that are not charged, exchanged or self-billed are not basis for sales promotions.

Note that there will be no automatic re-calculation or warning messages when changes are done to the customer order after sales promotions are calculated. Some changes might imply that applied sales promotions are no longer valid and other changes might imply that other sales promotions are valid.

Examples of Sales Promotions and Calculations

In this section you can see some examples of sales promotions. A sales promotion is defined, a customer order is entered and the calculation of a sales promotions is done. The different examples are:

Note that this is just a sample, there are many more ways of defining sales promotions.

Example Part/Discount %
“Buy 2 pieces of Part A,  and get 50 % discount on 1 piece of Part B”

Customer Order
Line No Part Quantity Price Amount
1 A 5 10 20
2 B 10 10 100

Buy condition fulfilled 2.5 times (5/2), get condition ordered 10 times (10/1) -> Sales promotion can be utilized 2 times:

Charge Price Calculation
Utilization Part Quantity Price Charge Price
1 B 1 10 -50% of 10 = -5
2 B 1 10 -50% of 10 = -5

-> One sales promotion charge with price -5 and quantity 2.

Example Part/Discount Amount
“Buy 2 pieces of Part A, get discount amount of 3 on 1 piece of Part B”

Customer Order
Line No Part Quantity Price Amount
1 A 10 10 100
2 B 3 10 30

Buy condition fulfilled 5 times (10/2), get condition ordered 3 times -> Sales promotion can be utilized 3 times:

Charge Price Calculation
Utilization Part Quantity Price Charge Price
1 B 1 10 -3
2 B 1 10 -3
3 B 1 10 -3

-> One sales promotion charge with price -3 and quantity 3.

Example Part/Price
“Buy 1  piece of Part A and 1 piece of Part B, and get the price of 15 on this”:

Customer Order
Line No Part Quantity Price Amount
1 A 2 10 20
2 B 3 10 30

Buy conditions fulfilled 2 times (2/1) and 3 times (3/1), get conditions ordered 2 times (2/1) and 3 times (3/1) -> Sales promotion can be utilized 2 times:

Charge Price Calculation
Utilization Part Quantity Price Charge Price
1 A 1 10 15 - 20 = -5
1 B 1 10
2 A 1 10 15 - 20 = -5
2 B 1 10

-> One sales promotion charge with price -5 and quantity 2.

Assortment/Discount %
“Buy 3 shirts, and get one shirt for free (100 % discount)”:

Customer Order
Line No Part Quantity Price Amount
1 Blue Shirt 2 10 20
2 Red Shirt 4 10 40
3 Black Shirt 1 9 9

Buy condition fulfilled 2.333 times (7/3), get condition ordered 7 times (7/1) -> Sales promotion can be utilized 2 times:

Charge Price Calculation
Utilization Part Quantity Price Charge Price
1 Black Shirt 1 9 -100% of 9 = -9
2 Blue Shirt 1 10 -100% of 10 = -10

-> Two sales promotion charges with quantity 1 and with price -9 and -10

Note that cheapest is allocated first.

Assortment/Discount Amount
“Buy amount 400 of tools, get discount amount of 40 on these tools”:

Customer Order
Line No Part Quantity Price Amount
1 Spanner 3 100 300
2 Hammer 2 100 200

Buy condition fulfilled 1.25 times (500/400), get condition ordered 1.25 time (500/400) -> Sales promotion can be utilized 1 time:

Charge Price Calculation
Utilization Part Quantity Price Charge Price
1 Spanner 3 100 -40
1 Hammer 1 100

-> One sales promotion charge with price -40 and quantity 1

Assortment/Price
“Buy 3 tulips, get 1 tulip for 8 SEK”:

Customer Order
Line No Part Quantity Price Amount
1 Red Tulip 2 9 18
2 Yellow Tulip 3 10 30

Buy condition fulfilled 1.67 time (5/3), get condition ordered 5 times (5/1) -> Sales promotion can be utilized 1 time:

Charge Price Calculation
Utilization Part Quantity Price Charge Price
1 Red Tulip 1 9 8 - 9 = -1

-> One sales promotion charge with price -1 and quantity 1

Note that cheapest is allocated first.

Notify and Analyze Potential Sales Promotions

It is possible to analyze the outcome of the sales promotion calculation for a specific customer order. You can view all potential sales promotion deals and figure out what do do in order to utilize more of the sales promotion deals and encourage the customer to buy more. The analysis is done in a window and it is possible to observe the following:

In order to have a better idea of when to do the analysis above, it is possible to decide via the basic data of the sales promotion deal that you want to be notified about sales promotion deals at customer order entry. You will get the notification upon the following actions:

A deal is considered as unutilized as long as you have ordered something corresponding to the conditions of the sales promotion deal, but not enough to utilize the deal even once.

There is also an event for when you have unutilized deals at order release. This is beneficial if you are not manually entering your customer orders but still want to be notified about unutilized deals e.g. EDI-orders.

Note that the analysis and notification above is possible for sales quotations as well, apart from the event.

Analyze Performance of Sales Promotions

If you want to analyze the performance of the sales promotion this can be done in three different ways:

  1. Analyze through customer order charges, since reference to sales promotion deal is saved on charges.
  2. Analyze the campaign, since the connected sales promotion charges are visible in the campaign.
  3. Analyze in IFS Financial, since it is possible to distinguishing sales promotion charges via accounting rules.

Note: Combinations of sales promotion parts, even if the parts were essential for executing deals and fulfilling buying conditions when customer orders are created, will not be affected when performing an RMA.