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Teaching notes · lesson 5 · a 20-minute class

Promotions: lift, dip and rented share

Deals sell now, borrow from later and rent share by the week. Tracks: Pricing, Retail.

Open the lesson

Learning goalsBy the end, students can

  • Define deal lift, post-deal dip and rented share.
  • Explain why a deal can raise net sales and lower gross profit at the same time.
  • Judge whether a promotion is worth running from its lift, dip and cost.

The 20-minute classMinute by minute, with the lab on the projector

  1. 0:003 min, to 3:00

    Cold open

    Ask who has a cupboard with three of something bought on offer. That is the post-deal dip, sitting at home.

  2. 3:004 min, to 7:00

    The idea

    Draw the shape: baseline, lift, dip. Name the three sources of lift: switchers, people who would have bought anyway, pull-forward.

  3. 7:005 min, to 12:00

    Lab on the projector

    Run a shallow deal, then a deep one. Point at the lift, the dip in the next quarter and the profit line.

  4. 12:003 min, to 15:00

    Pairs

    Pairs estimate who got the discount: how many of the deal's buyers would have bought at full price?

  5. 15:003 min, to 18:00

    Discussion

    Take the rented share question. Ask what the brand has left when the deals stop.

  6. 18:002 min, to 20:00

    Check

    Three lesson questions. Exit line: one deal you'd run and one you wouldn't.

Discussion questionsWith what a strong answer covers

  1. A deal lifted net sales and lowered gross profit. How?

    A strong answer covers
    • The discount applies to every unit sold on deal, including loyal buyers' units.
    • That subsidy can be bigger than the margin on the extra units.
    • Mentions the dip next quarter.

  2. What is rented share, and why does it matter to a board?

    A strong answer covers
    • Share that lasts only while you keep paying for deals.
    • It flatters a quarter but builds no memory.
    • A quarterly target can hide the cost.

  3. When might a promotion be worth it?

    A strong answer covers
    • When it wins new buyers who stay, not just pantry loading.
    • When margin on extra units covers the discount to existing buyers.
    • Recognises the brand cost: price sensitivity and learned waiting.

The lab as homeworkAbout 15 minutes for a student

Use the lab to measure a deal's full cost, not just its lift.

  1. Run a deep deal for half of the first quarter.
  2. Note the lift that quarter and the dip in the next.
  3. Note gross profit across both quarters against the baseline.

They answer: How big was the lift, how big was the dip that followed, and did the deal add or cost gross profit across the two quarters?

A strong answer covers
  • Quotes the lift and the dip from the lab.
  • Nets them off rather than reading the lift alone.
  • Explains the subsidy to buyers who would have bought anyway.

Students also answer the lesson's three questions. Their score is worked out on the server from their answers.

Set this lab as homework

Students open a link, do the lab, answer the three questions and write what they found. You see each student's quiz score and finding on your class page.

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