Added Value Analysis
This technique is used where the main objective is to identify opportunities to change levels of promotional investment within your product portfolio. This form of analysis may also be extended to compare different markets.
Detail of the AVA
Uses a reliable and proven methodology to calculate the added value ratio for each year and then identify any problems and all of the opportunities hidden in the data:
Inappropriate forecasting - When a ratio changes significantly from one year to the next it would suggest there is something odd about the forecasts
Inappropriate spend - If the spend and forecasts have been done "independently" quite often they do not really make much business sense
Inadequate or excessive spend - Where the ratio is very high surely this means that greater spend would have a beneficial effect?
The AVA cleary and quickly identifies
Areas where forecast and budget construction can be improved
Those products and markets where extra promotional investment would bring in extra profits (and of course the converse - this technique exposes those areas where money is probably being wasted)