Markdown Rules (SAP Library - Strategic Sales)

Markdown Rules

Use

Before you can use the markdown planning function, you must first create one or more markdown calculation rules. Later you will apply these rules to specific plans or even to individual articles or merchandise categories.

Markdown rules specify:

The time interval between markdowns

The percentage of the original price at which the merchandise is to be sold during each price phase

The percentage of total sales you expect to achieve for each price phase

Example

Calendar days after start	% of original sales price	% of sales
	100	50
60	75	30
90	50	10
120	33.3	5

Day 0 is when the merchandise is originally displayed in the store. Within the first 60 days, you expect that 50% of your stock will be sold at the full price. At that point you will mark the merchandise down by 25%, so that it now sells for 75% of its original price; this will contribute another 30% to sales. After another month, you again mark the price down by 25%, so that now the price is half off the original, and this will bring another 10% in sales. And so on for the remaining month.

The first line is always reserved for the starting point, which by definition is 100% of the original price. The system automatically inserts it for you. Your total sales volume need not equal 100%.

Percents need not be whole numbers.

To enter a markup, use a percent that is larger than the previous line (e.g., 110% of original price).

These are generic rules. They do not yet apply to any actual merchandise (you will do that in a subsequent step). You may want, for example, to have different markdown rules for women’s fashions, school supplies, Christmas novelties, etc. You can create as many or as few rules as you want.

Activities

Markdown rules are a tool for standardizing your markdown procedures across product lines and streamlining your planning entries. When you apply a standard markdown rule to specific merchandise, you can change the parameters of the rule at that time: omitting or adding price phases, elongating the time periods, or otherwise tailoring the rule to the circumstances. These changes will not affect the standard rule itself, only your application of it in this specific instance.