Business Intelligence and FMCG Glossary: #baseline
Baseline
What is the baseline?
To evaluate the effect of a promotion on the sales of a product it is necessary to do so based on a “normal” sales level or “baseline”. The baseline is thus the level of sales that would have occurred without any promotional action.
To be sure that it represents consumer / shopper demand outside of any stock effect (speculative, for example), it should be calculated with sell-out data, if possible, per store.
To really isolate the promotional effect, the baseline is evaluated considering the effects of seasonality (winter, summer) and/or exceptional non-reproducible events: the baseline of beer sales in January will thus be lower than in June during the football world cup.
Finally, although the baseline can be calculated in several different ways, it is important to choose one and keep it so that the historical results remain comparable over time.
