Glossary

This glossary provides terms and definitions for the DemandTec by Acoustic software and products.

The following cross-references are used in this glossary:

See refers you from a nonpreferred term to the preferred term or from an abbreviation to the spelled-out form.
See also refers you to a related or contrasting term.

For other terms and definitions, see the IBM® Terminology website (opens in new window).

A B C D E F G H I K L M N O P R S T U V W Z

A

ABC: See activity based costing.
accrual fund: A method of funding which is used to allocate trade funds between a manufacturer and a retailer.
activity based costing (ABC): An accounting method used to measure the cost and performance of activities, resources, and cost objects.
ACV percentage: See historical store participation.
ad allowance: A sum of money paid to a retailer from running a series of advertisements for the manufacturer. The allowance is determined by the quantity of product purchased from a manufacturer.
ad zone: A collection of stores that offer the same advertised promotion.
allowance: A discount given to a retailer by a manufacturer in the form or monies, product discounts, shipping discounts, and so on.
allow backhaul: A Boolean field that indicates if a product can be returned to the supplier on the supplier’s truck in the case of an unsold or broken product.
anchor class: A collection of products with similar anchor prices.
anchor price: A pre-established price point around which price fluctuations are determined.
application service provider (ASP): A vendor that provides an outsourced function to leverage scale economies, for example, hosting services.
ASP: See application service provider.
assortment: The variety of products within a merchandise category, group or department.
assortment optimization: A marketing strategy tool that determines the best assortment in order to maximize effectiveness of a scenario.
at-large rule: A constraint that applies to an entire scenario.
attribute: A characteristic or trait of an entity that describes the entity; for example, the telephone number of an employee is one of the employee attributes.

B

backhaul: An additional pickup and delivery in the reverse direction made while a vehicle is returning to the starting site after it has made a delivery.
backhaul allowance: A sum of money paid to a retailer that is determined by the quantity of product moved from the manufacturer's location to a retailer's location by the use of contracted trucks.
base price: The manufacturer's suggested retail price.
base support: The total baseline volume exposed to a promotion.
basis point: The smallest measure used to quote financial return. One basis point equals one one-hundredth of a percent. For example, the difference between a net profit margin of 2.25% and 2.50% percent is 25 basis points.
Bayesian inference: A statistical inference in which probabilities are interpreted as degrees of belief.
Bayesian shrinkage: A Bayesian methodology whereby information is borrowed across products and stores in order to intelligently reduce model estimates and moderate extreme values.
block: See store zone.
BOGO: See buy-one-get-one free.
brand: The source of a relevant, distinctive and enduring "promise of value" to a specific set of customers. The promise should be relevant to those customers and be differentiated from those of competitors. A powerful brand influences a marketplace, demonstrates leadership and quality, and is familiar and trusted.
brand class: A collection of brands based of set of similar traits or attributes. For example, generic sodas can be placed in a private label brand class and Coke in a national label brand class.
brand class rule: A constraint imposed on members of a brand class that determines the price relationship among members.
brand family: A subset of a brand class.
brand manager: A person who charts the strategy and tactics surrounding the brand plan. For example, the brand manager tracks which new products get developed and which marketing mix events will occur.
brand rule: A constraint imposed on members of a brand that determines the price relationship among members.
breadcrumb trail: A navigation technique used in a user interface to give users a way to keep track of their location within the program or documents.
business rule: A constraint on optimization that allows rules to describe strategies or policies that are important in guiding the outcome of the optimization to suit the customer’s needs.
buying allowance: A sum of money paid to a retailer that is determined by the quantity of product cases purchased by the retailer.
buy-one-get-one free (BOGO): A promotion tactic often used to give consumers an incentive to buy and stock up on a product.

C

calculation context: A configuration setting that forecasts a promotion in a specific context in order to account for historical levels of promotion on non-promoted products.
cannibalization: The negative effect on the sale of a product when a consumer purchases one product instead of another. For example, when a new flavor of yogurt is introduced the increased sales of the new flavor affect the sales of the other flavors of yogurt.
case allowance: A discount of a fixed dollar amount on the price of a case of a product. For example, the manufacturer offers a reduction in the price per case of product in order to offload inventory quickly.
case cube: The volume of a product when packed in a case form.
case list cost: The manufacturer's cost of a product in case form.
case pack: The number of units of a product when packed in case form.
case volume lift percentage: The percentage of cases that will be sold as a result of a promotion.
category: A group within a system of classification whose contents share similar properties.
category management: The process of determining the price, promotions, assortment, and the shelving of a product category.
category manager: A person responsible for all merchandising activities for a category of products, including price, promotion, placement, and assortment.
category plan: All promotions for one category that intersect in time with a specified date range.
chain: A branded collection of stores with a single owner.
client: The user interface application installed at the customer site.
client product key: The customer's unique SKU identifier for this product.
club card: See loyalty card program.
coefficient: A number representing the relationship between a dependent variable (for example, sales volume or share) and an independent variable (for example, base price or discount).
COGS: See cost of goods sold.
comparative shopping (comp shop): The act of verifying the price of a product or service of a competitor.
competitive price: A product price that is perceived to be a good value compared to what the competition is charging for the same product.
competitive product: A product that is sold profitably and is able to maintain its place within a market of similar products.
competitor: A retailer who is identified when price matching an item, and who may be offering the item at a lower price than that offered by the corresponding enterprise.
competitor price rule: A constraint imposed on the price of a product or service in order to stay within the price range of a retail competitor.
complementary product: An item that a consumer buys because it is related to another product. For example, consumers who buy hot dogs will usually buy hot dog buns.
comp shop: See comparative shopping.
consideration set: The set of brands that a consumer considers when making a product purchase decision.
constraint: See business rule.
consumer: An individual who purchases products or services from an enterprise.
consumer demand model: A system of equations that predicts how much consumers will buy depending on factors such as price, seasonality, and promotions.
consumer loyalty: The affinity that a consumer has for a product or a retailer that makes them more likely to purchase a specific product, or shop at a specific store.
consumer response model: See consumer demand model.
consumer unit: An abstracted sales unit that can aggregate multiple unique UPCs into what a consumer considers a single item. For example, different UPCs for the various brandings of the same product can be linked by a consumer unit.
contribution margin: The remaining dollar amount in an adjusted gross margin after variable costs are subtracted.
cost: The amount of money paid to a manufacturer for a product.
cost class: A collection of products with similar or related costs.
cost family: A subset of a cost class.
cost of capital: The amount of money associated with carrying merchandising inventory.
cost of goods sold (COGS): The amount of money that a retailer pays a manufacturer for a product.
cost type: The highest-level category to which costs are assigned in budgeting and accounting, for example, hardware, software, people, accommodation, external and transfer.
CQD: See cumulative quantity discount.
cross elasticity: A measure of relatedness among the purchase of products that is expressed in terms of a numeric value. The relationship is expressed by a positive value if the products are related and a negative value if they are unrelated.
cross elasticity of demand: See cross elasticity.
cumulative quantity discount (CQD): An allowance that varies with volume. For example, the retailer will receive a payment of $1.00 per case for the first 1000 cases, or $2.00 per case for the next 1000 cases.
customer: A person or organization, internal or external to the producing organization, who takes financial responsibility for the system. In a large system this may not be the user. The customer is the ultimate recipient of the developed product and its artifacts.

D

deal period: A period of time in which a retailer qualifies for the manufacturer's discounted price.
deal term: Stated conditions, restrictions, and exclusions on a deal.
demand curve: The demand for a product over a price range across time.
demand group: A collection of products with a high cross elasticity. The price and promotion of one item in the group directly affects that demand for the other items.
direct store delivery (DSD): The shipment of a product from the manufacturer to the retailer bypassing distributors and wholesalers.
display media: Various methods for attracting consumer attention to a particular product.
drop ship method: A method of product shipment used to reduce inventory costs by having the manufacturer ship an order directly to the consumer on behalf of the retailer.
DSD: See direct store delivery.
dynamic product group: A collection of products with similar or related costs to which new products are automatically added or removed based on a criteria filter.
dynamic store group: A set of stores that are treated as one unit to which stores are added or removed automatically based on criteria filter.

E

EDLP: See everyday low pricing.
elasticity: A measure of consumer responsiveness in terms of quantity of a product purchased in relation to the increase or decrease of the product's price.
elasticity of demand: The rate at which demand changes for a change in price. Change in demand divided by change in price.
end cap: A display at the end of an aisle.
end-of-life date: The date in which the normal demand for a product falls to a value very close to zero.
equivalent price difference: A measure of the difference between the initial equivalent price and the optimal equivalent price.
equivalent price percentage change: A measure of the difference between the initial equivalent price and the optimal equivalent price in terms of percentage change.
equivalent retail price: The shelf price of a product divided by the standardized unit of measure.
equivalent unit: A standardized measure of volume based on a process of equivalization. See also equivalization.
equivalent volume: The relative number of equivalent units sold. For example, if two 12-packs of Coke are equal to one equivalent case, and two equivalent cases are sold, then the equivalent volume is two.
equivalent volume difference: The difference between the initial equivalent volume and the optimal equivalent volume in absolute terms.
equivalent volume percent change: The difference between the initial equivalent volume and the optimal equivalent volume in terms of percentage.
equivalization: The assignment of a standardized unit of measure to a product based on the product’s description and the spread of sizes or counts that apply to that description. For example, both one case of Coke and two 12-packs of Coke are equal to one equivalent case. See also equivalent unit.
event: A group of promotions arranged in a particular theme.
everyday low pricing (EDLP): A performance detail type which is used when a price change lasts more than eight weeks or significantly longer than a temporary price change.

F

facing: The number of items on a shelf that are facing the customer. Facing provides a measure of store space allocated to a single product.
facing optimization: A process that is used to determine the most effective product facing.
feature: Part of a product that is either included with the product or can be ordered separately.
financial modeling: See activity based costing.
fixed cost: An expenditure that does not vary with the production volume, such as rent, equipment, buildings, property tax, and some salaries.
fixed trade fund: Monies that the manufacturer pays to the retailer to secure a display or an advertisement.
forecast: A function that can provide a prediction of future performance of a managed system using past data collected on that managed system.
form class: A group of products that share the same form, such as a liquid or a solid.
forward buy: A purchase of an amount of product that exceeds immediate needs in order to take advantage of favorable pricing offered for promotions.
franchise pricing: A set of functionality which allows users of Price Management and Price Optimization to set transfer prices.
freight allowance: A sum of money paid to a retailer that is determined by the quantity of product moved from the manufacturer's location to a retailer's location by manufacturer owned trucks.

G

gross margin: See gross profit.
gross margin rule: A constraint imposed on the optimization to stay within a particular gross margin range.
gross profit: Revenue minus cost.
group ID: A system-generated grouping identifier for ad slots that should appear together.

H

historical accrual fund: The amount of trade funds spent by a particular account. The amount spent is determined by the number of cases a retailer buys from the manufacturer in the previous year.
historical store participation: A metric that is used to estimate the proportion of stores that will execute a promotional activity.
hurdle rate: The minimum rate of return for a new product investment.
hurdle rate rule: A constraint imposed on the minimum rate of return on a new product investment.

I

incremental case: The number of cases that the retailer will sell from the promotion.
incremental manufacturer profit: Any additional manufacturer profit generated from a promotion.
incremental manufacturer revenue: Any additional manufacturer revenue generated from a promotion.
incremental unit: The number of units that a retailer sells throughout a promotion period.
incremental value: A measure of incremental profit change.
incremental volume: The cumulative growth of a product group in terms of volume as a result of adding additional products to the group.

K

key performance indicator (KPI): A quantifiable measure that is designed to track one of the critical success factors of a business process.
KPI: See key performance indicator.

L

labor rate: An hourly labor cost including wages and benefits.
last suggested price (LSP): The recommended price from the last pricing action, such as an optimization, rules pricing, price update, or reforecast.
LG: See location group.
LGC: See location group class.
license: A legal agreement that authorizes the use of proprietary information including, but not limited to, copyrighted or patented information.
lift: Statistical measure that is the ratio between the joint probability of two variables with respect to their expected probabilities under the independence assumption.
line: A company's related products that are marketed individually.
line group: A collection of related products within a product line.
line price class: A group of related products that share a fixed price.
line price group: See line price class.
line pricing: The assignment of a fixed price across similar products.
live accrual fund: The amount of trade funds spent by a particular account. The amount spent is determined by the number of cases a retailer buys from the manufacturer in the current year.
location group (LG): A hierarchical group of locations that can be selected for a promotion.
location group class (LGC): A hierarchical group of location groups.
location key: A number assigned to a store that is assigned a particular SKU number.
logistical unit: A source of information that indicates how a product is to be shipped to a retailer.
loyalty card program: A program that consumers sign up for to enjoy discount or reward programs in return for tracking of consumer behavior patterns.
LSP: See last suggested price.

M

magic price: A price point at which the demand for a product increases dramatically.
manufacturer contribution margin: The manufacturer's gross profit minus trade spending.
manufacturer cost change: A manufacturer-driven change in the purchase price of a product.
manufacturer post-trade cost: The weighted manufacturer's product cost after factoring in trade spending for one unit volume.
manufacturer pre-trade cost: The weighted manufacturer's product cost prior to factoring in trade spending for one unit volume.
manufacturer trade fund ROI: The change in the manufacturer's gross profit due to the promotion divided by the trade spending.
markdown: The amount by which the price is reduced to increase the sales of a product.
market: A set of potential purchasers/customers having common requirements who are willing and able to spend money to satisfy their wants and needs.
master calendar: A merchandising activity calendar.
measurement point: A point along the supply chain where a movement allowance is calculated.
merchandising: The various aspects related to the promotion of a product. This includes coordinating production and marketing, developing advertising, managing product displays, and sales strategies.
modeling: A technique that is used to predict the future behavior of customers based on historical consumer data and historical store promotions.
multibuy: A TPR that allows the consumer to purchase several items for the equivalent price of fewer items. For example, three for the price of two. See also multiple.
multiple: A price statement in which multiple products are offered at a particular price. For example, two products are offered for $1.00. See also multibuy.

N

net margin: See net profit.
net profit: Gross sales minus cost of goods sold, cost of operations, taxes, interest, and depreciation.
non-performance allowance: Additional funding from the manufacturer to the retailer that is not tied to a promotion. Some examples are freight allowance, backhaul allowance, spoilage allowance, and buying allowance.

O

offer: The price of a product, in one or more currencies, along with a set of conditions such as an effective time range or an acceptable quantity range, which must be satisfied in order to use the price.
off-invoice: The amount of money that the retailer has earned from the manufacturer as a result of running a promotion.
optimization: The process of finding the best formula for achieving a given merchandising objective.
optimization scope: The aspects of a promotion that the optimization was allowed to change, such as a TPR, any products on display, and so on.
overhead: Costs incurred in the operation of a business that cannot be directly related to the individual products or services produced. These costs such as light, heat, supervision and maintenance may be grouped into multiple pools (department, factory, general overhead) and distributed to units of product, or service, by some standard method such as direct labor hours, direct labor cost, and so on.
overhead allocation: The amount of overhead costs attributed to a particular product.

P

package: A group of products sold for a single price term that is different than if the products were purchased separately.
panel data: A collection of data about an individual that is the result of monitoring their consumption patterns, the impact of promotions on their consumer behavior, and changes to their consumer behavior.
pantry loading: The act of stocking up on a product because it is on sale or it is promoted.
pass-through threshold: The maximum percentage of an allowance that can be passed on to retail customers.
percent funding: An allowance basis that calculates the allowance amount as a percentage of the promotion’s TPR amount.
performance allowance: A discount for which a retailer qualifies after performing a promotion on behalf of the manufacturer.
performance detail: A merchandising strategy. This includes product displays, temporary price reduction, or everyday low pricing.
performance detail group: A combination of performance details that apply to the same product and the same location.
performance period: A period of time in which a promotion is performing. For example, the amount of time a product will appear on display or be advertised.
planogram: A visual virtual representation of product layout within a store. A planogram is used to optimize product displays and maximize the effectiveness of product placement.
point-of-sale data (POS data): Information that is collected by scanning products at the check-out. The data include the items purchased, the volume of sales, and the purchase price for all items sold.
POS data: See point-of-sale data.
potential average quantity: The average of the minimum and maximum quantity values for a package.
PPG: See promoted product group.
pre-price class: A group of products that share the same pre-price.
price elasticity: See price elasticity of demand.
price elasticity of demand: The rate at which product demand changes due to a change in product price. Elasticity is represented as a change in demand divided by change in price.
price gap: The difference in price between two related products.
price image: The consumer perception of a retailer’s prices and value.
price lock: An optimization function that holds the unit price of a line item constant.
price rule: See business rule.
price zone: A group of stores that always have the same prices across products.
product cost: The amount of monies paid to a manufacturer or wholesaler by a retailer in order to carry a specific product.
product cube: The volume of space occupied by a product, expressed in cubic feet.
product elasticity: Price elasticity of demand for a particular product.
product pair: A set of two products that have a promotional constraint established between them.
product relationship: The established connection between two products.
product share: The ratio of the revenue of an individual product to the total revenue in one store.
product storage type: The location in the store that houses a product.
product velocity: The rate of sales of a product over a defined time period. For example, the number of units of a product that are sold in one month.
profit: Revenue minus variable costs, fixed costs, and activity-based costing costs.
promoted product group (PPG): A group of products from the same product line that are promoted together.
promotion: A temporary product price adjustment, consumer benefit, or both, tied directly to the purchase of a product. See also scenario.
promotion validation: A process that automatically detects errors in a promotion.

R

reference cost: The cost used to determine the triggers in the price update process.
release: A distribution of a new product or new function and authorized program analysis report (APAR) fixes for an existing product. The first version of a product is announced as release 1 modification level 0.
replenishment frequency: The number of times that store or distribution centre inventory is replaced in a given time period.
retail price: The price that a consumer pays for a product.
return on investment (ROI): The amount of profit or cost saving that is realized for a given expenditure.
revenue: The monies that are received for products or services rendered to customers.
ROI: See return on investment.

S

sale impact: A measure of the effect of a sale or promotion on the demand of a product.
sales: See revenue.
sales volume: The number of units of products sold in consumer or business-to-business transactions.
same-store comparison: A measure of sales growth across stores excluding the impact of newly opened stores.
scan allowance: A discount offered to the retailer from the manufacturer for a specific product that is sold during a promotion period.
scanner data: See point-of-sale data.
scenario: A set of constraints and rules applied to product, store, price, and cost data that is optimized to achieve a particular business objective in terms of profit, revenue, and volume. See also promotion.
scope: The full extent of the aspects of a project.
seasonality: A trend in consumer behavior that is determined by the time of year.
single product rule: A constraint imposed on the optimization of a single product.
size class: A group of products that is determined by their size, volume, and weight.
size class set: A group of size classes that is populated with similar size classes comprised of related product categories.
size family: A subset of a size class. Size families are created in order to exclude some members of the same size class.
size group: See size class.
size rule: A constraint imposed on similar products that are related in volume, weight, and count.
SKU: See stock keeping unit.
slotting fee: A fee charged to a manufacturer for introducing a new product onto a retailer's shelf.
spoilage allowance: A discount offered to the retailer to compensate for the spoilage of goods.
static product group: A collection of products with similar or related costs to which new products are manually added or removed.
stock keeping unit (SKU): An alphanumeric identifier for each item of merchandise, or catalog entry. The smallest unit available for keeping inventory control. It can include variables for department, class, vendor, style, color, size, and location.
stockpiling: See pantry loading.
store-for-store sales: See same-store comparison.
store group: A set of stores that are treated as one unit to achieve a business goal. For example, stores in a given region are treated as a unit.
store traffic: The number of shoppers per unit of time.
store zone: A group of stores that share a set of prices.
strategy: The overall plan of action (such as for a brand unit, business unit, channel, or company) to achieve a stated goal.
substitute product: A product that a consumer would purchase instead of another product with the same or similar utility without the loss of a significant amount of perceived value.

T

temporary price reduction (TPR): A temporary reduction in the consumer price of a product.
term license: See license.
time cannibalization: See pantry loading.
time horizon: The duration of a product promotion or product scenario.
time series: A set of values of a variable at periodic points in time.
TPR: See temporary price reduction.
trade fund: Monies offered to a retailer by a manufacturer for the promotion of a set of products. This fund is usually allocated to pay for promotional activities on the part of the retailer, including ads, displays, and temporary price reductions.
trade spend: See trade fund.
transfer price: See franchise pricing.
trend: A series of related measurements that indicates a defined direction or a predictable future result.
two product rule: A constraint imposed on two products.

U

UEF: See user-entered forecast.
unit cost: The per unit vendor cost associated with the SKU.
unit sales: See sales volume.
unit volume lift percentage: The percentage of units that will be sold as a result of a promotion.
universal product code (UPC): A standard bar code, commonly used to mark the price of items in stores, that can be read and interpreted by a computer.
UPC: See universal product code.
user-entered forecast (UEF): A tool that allows the user to override the system-generated forecast.

V

value-added tax (VAT): A transactional consumption tax charged on most public and private consumption.
variable cost: An operating cost that varies directly with production volume; for example materials consumed, direct labor, sales commissions.
variable trade fund: The sum of performance allowances and forward buy allowances.
VAT: See value-added tax.
vendor: A person or company that supplies materials or services to another person or company.
vendor cost change: See manufacturer cost change.
vendor days credit: The number of days extended to the customer before payment is due.
vertical service provider: An industry-focused application service provider.
vignette tax: A fixed-fee tax on a product that does not represent a proportional amount of the product price.
volume: The number of units sold for a particular SKU.
volume difference: The difference between the initial and the optimal volume or predicted number of units sold.
volume of measure: The size of the SKU in absolute terms.
volume percent change: The difference between the initial and the optimal volume or predicted number of units sold in terms of percentage.
volume rule: A constraint imposed on products within a given volume range.

W

warehouse allowance: A discount offered to the retailer on all products shipped to the retailer from the manufacturer.
what if statement: Varying key assumptions to determine how the end results of an analysis differ.
whitelist: A list of approved websites which are ignored by the software to block pop-up ad windows and allowed to function without interference.
workflow status: A category type used for tracking the status of a promotion or category plan.

Z

zone: A logical section within an area. A zone can overlap areas but belongs only to the area where it was created. Zones are the units on which rules can be defined and run.
zone group: A group of stores that share an established price for a given product.
zone price: An established product price for a group of stores in a given zone.