There is a tradition in advertising that needs to be changed. The tradition is that a business spends a sizable amount of money to advertise their product or service in the media - television, radio, newspaper, direct mail, etc. As they advertise, the promote an item, or items, at a special price for a limited amount of time in an effort to get customers to come to their business.

If businesses were to calculate the savings that customers received from the marked down prices and compared it to the cost of advertising, they would likely find that they spent many times more in advertising than what they gave in markdowns. Now, think about it. Do you think a customer is going to tell their friends about the sale at a business when the savings were marginal but the business spent a lot of money with the media? Or, would the customer be more likely to spread the word about a business if they had saved a lot of money?

Now, what is the difference in the business spending $1,000 in advertising with $200 in markdowns and the business that spends $200 in advertising and with $1000 in markdowns? The total cost to either business is $1,200. But surely, the business with more markdowns than advertising expenditure is going to get much more favorable reaction from customers.

That is what the promotion planning calculator does to help. Your first decision in using this calculator is to determine for each dollar you spend in advertising, how much do you want your customers to receive in savings. As you make this decision, the amount of customer savings should be your best estimate of actual savings received - not the total amount of markdowns.