July 30, 2002, 12:00 AM

Using the web to determine if loss leaders are doing their job

More than a third of its Teradata division’s retailer customers have bought software that analyzes customers’ purchases in relation to loss leaders, NCR says.

Kurt Peters

Executive Editor

Retailers are harnessing the web to determine the effectiveness of their loss leaders, says NCR Corp.’s Teradata division. More than a third of Teradata’s retailer customers have bought software that analyzes customers’ other purchases at web sites and in stores and reports whether the loss leader was bought with other products, which products and the profitability of baskets that included loss leaders.

"Retailers can determine if a loss leader is really a losing proposition, item-by-item,”: says Rick Schultz, Teradata`s vice president of industry marketing for retail. “If a loss leader item is just being cherry picked, a retailer can dump a promotion in almost real time to recover margins. As a result, it is helping to cut inventory costs, while producing more effective promotional campaigns.”

In addition, the software determines how customers shop a given web site, measures response rates to e-mail offers, banner ads, customer referral mechanisms and analyzes behavior across channels, allowing the retailer to tailor web infrastructure based not only on web behavior, but also across channels.

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