Patent ID: 8140381

Claim:
A computer implemented method for merchandising decomposition analysis, useful in association with stores, the method comprising: setting initial prices of products, wherein the products are products sold by the stores; compiling initial point of sales data from the stores; generating demand forecast model for product sales of products using the initial point of sales data; optimizing prices using the demand forecast model; generating a profit and sales lift prediction based upon the optimized prices; resetting prices of the products to the optimized prices; collecting subsequent point of sales data from the stores, wherein the subsequent point of sales data reflects transactions that include the optimized prices; generating, using a processor, back-casts of volume, revenue and profit by applying causal data in the subsequent point of sales data to equations of the demand forecast model, wherein the back-casts predict volume, revenue and profits had the product maintained the initial prices adjusting the back-casts to account for effects unknown when the profit and sales lift prediction was generated; comparing the adjusted back-casts to the profit and sales lift prediction to generate a benefits analysis, wherein the benefits analysis includes a differential benefits analysis comprising the steps of: detecting pre-optimization price of the products; detecting pre-optimization cost of the products; generating pre-optimization forecasted units, wherein the pre-optimization forecasted units are predictions of volume of sales of the products at the pre-optimization price, and wherein the pre-optimization forecasted units is generated by utilizing the pre-optimization price and the demand forecast model; calculating forecasted pre-optimization profit by subtracting pre-optimization cost from pre-optimization price and multiplying the result by the pre-optimization forecasted units; detecting post-optimization price of the products; detecting post-optimization cost of the products; generating post-optimization forecasted units, wherein the post-optimization forecasted units are predictions of volume of sales of the products at the post-optimization price, and wherein the post-optimization forecasted units is generated by utilizing the post-optimization price and the demand forecast model; calculating forecasted post-optimization profit by subtracting post-optimization cost from post-optimization price and multiplying the result by the post-optimization forecasted units; generating raw profit benefit by subtracting forecasted pre-optimization profit from the forecasted post-optimization profit; and calibrating raw profit benefit by iteratively excluding effects, wherein the demand forecast model include the effects, and further wherein the effects include at least one of promotion effect, ad effect, discount effect, halo effect, cannibalism effect, seasonality effect, holiday effect and event effects; and displaying the generated benefit analysis.