Promotion and Bonus integration

For Company operating in retail industry working without promotions is rather not possible at the
moment. Unfortunately with most of the projects I have seen for retail industry, external tools are
used to plan and execute promotion management as a replacement of using SAP promotions.
Other solution is that in SAP only promotion determination is done in Sales documents for further
reporting analyses but whole planning and logistics operations are done outside.

Below described SAP configuration of promotion with integration of Bonus buy in POS system.

Customizing

Customizing for promotion is in SPRO -> Logistics -> General – Retail Promotion

Promotion type: As a first step new promotion type (or existing can be reused as well) is defined.

Definition of promotion type is split into following section

 Price activation – These are default values regarding conditions that are going to be
created and on which level. All are changeable directly in the promotion. As in the
example below, only sales price (Create SP conditions) is going to be changed and
adjusted in transfer price from DC to store will be done (Create DC conditions). For sales
price calculation option ‘Without calculation’ means creation of sales conditions without
any margin calculation that is without change of DC and Purchasing conditions. From
remaining fields important is Price activat. type which indicate level of price activation
(again changeable in Promotion).
 Condition type groups – Because as a result of promotion processing we can generate
multiple of different pricing conditions, allowed to be generated in Promotion are
assigned to groups (one group for purchase one for sales). These condition are
supplementary regarding to promotion sales price calculation.
 Reference for sales price determ. – Whenever article is entered in the promotion system
tries to calculate non-promotion sales price. To determine sales price procedure
distribution chain and reference site is needed. Despite mentioned parameters are not
mandatory it’s important to enter them in case if promotion is article related as system
based on it does promotion sales price conditions determination.
 Sales Discount – As the promotion is not always related to article discount, there is an
option to generate again special sales conditions for absolute percentage and value
discount. You can assignment it to different level of groups like merchandise categories
etc.
 Control – This section describes non-pricing related behaviour of promotions. At the
beginning set of default dates for multiple purposes like prices dates, start of sales, listing
etc (more regarding dates later). Further default values for allocation table are set and
how article is checked against promotion listing procedure (listing procedure one that is
marked as default for promotions – field TWLV- AKTVF). For announcement as a
subsequent processing output with promotion can be generated, procedure and
application are set here.

Below example of promotion type configuration that I’m going to use later on.
 

Sales Price calculation and Condition generation

Price conditions coming out of promotion processing could be generated in three different way
from a single promotion.

Tab Discounts – here condition types defined in the section of Sales Discounts of promotion can
be maintained for Material (only these assigned in promotion), Material category, MC hierarchy,
Article hierarchy or generally valid condition. Per one level of new condition maintaining it’s
possible to enter either percentage discount or value discount, not both together.

Tab SP conditions – in this tab, sales conditions assigned to group of SP condition defined in
promotion are maintained. Due to the system is launching tcode to maintain condition (VK11)
information about which table is to be used is assigned in customizing.
Fast entry tab (or details of promotion item) – last way to generate promotion conditions
(generation depends on sales, purchasing and DC checkbox) is related to sales price calculation.
Below only short explanation related more to integration between promotion processing and
sales price calculation. The whole process of sales price calculation is quite advance and for
more details about it including logic for transfer price, please have a look here.

How the sales price is calculated in Promotion?

To calculate initial sales price system needs to determine first sales calculation procedure. In
definition for promotion type there is a section reference for sales price determination that
includes fields Sales Organization, Distribution channel, Customer and Price List. These fields
are copied to promotion and based on them system does determination of sales price calculation
procedure (more preciously only with Sales Organization, Distribution channel and Price List).
With determined procedure sales price is calculated. If Customer is defined in promotion type it’s
used to calculate price, otherwise price on the level of Distribution chain and price list is
calculated as a base sales price in promotion (TCode VKP2 can be used to display article price
on different levels).

Whenever new sales price has been set in promotion, system is executing sales price calculation
with procedure determined as described above. With new values further processing steps
depend on settings in promotion, which new conditions should be created (Sales, DC,
Purchasing) or if sales price should be directly stored in condition (‘Without calculation’
checkbox) when price is activated.

Some steps in executed pricing procedure contain extra condition type that is updated in case of
promotion processing. Example of it is step with list field ENDPR that in regular price calculation
updates VKP2 condition type but in case of promotion calculation VKA0 condition type is
updated.

Promotion creation
Promotion can be created from WAK1 transaction or from Price Planning Workbench (PPW).
Second option is more related with price and markup calculation and integration with MAP
(Merchandising and Assortment Planning). In this article only direct creation option with WAK1 is
used.

From my perspective promotion can be split into two kinds, first one is where articles are
assigned and second type is where only condition types for discounts or bonus buy are created
(third option is to use both options in same promotion).

On the initial screen basic data regarding promotion are entered like currency and ‘on sales
date’. In overview section most of data is entered regarding article, quantity, logistics (allocation,
deliveries etc), site validity, bonus buy and discount. Some of them like bonus buy, discounts or
modules are not available in creation mode but only in change.

I will skip settings like allocation (more information about allocation can be found here), free buys
etc. Allocation tab controls the degree of store participation (mandatory quantities of
merchandise for each store, optional quantities and optional participation).

At the header level, mostly default data has been copied from promotion type definition.
If you wish to clearly define responsibilities, you can assign organizational levels (purchasing
organization, sales organization and distribution channel) to a promotion as an attribute for
evaluation purposes.

For date purpose there is an option to set different validity periods and/or delivery dates for
stores taking part in the promotion. Option to set validity periods for purchasing, sales, and
deliveries, for both retail and wholesale customers.

 The purchasing period, within which you can order merchandise from your suppliers.
Only during this validity period do the promotion purchasing conditions apply.
 The order period, within which orders can be placed with the distribution center
 The delivery period, within which merchandise must arrive in the stores
 The selling period, within which the sales price conditions defined for the promotion are
valid and within which the merchandise is on sale in the stores

On item level following tabs are filled in creation mode (don’t forget that some of them can only
be maintained within change mode).

Site group assignment – here promotion is assigned to sites that participate in it. This require to
created site group. Site group can be created in advance and used multiple times or it’s
promotion dependent. Second type work fine but I’m not able to generate listing conditions based
on site-group created only for promotion.
As a limitation I see that promotion cannot be created directly for the Customer which can be
huge wholesale organization. In this case Customer should be reflected in the system as site to
assign it site group, or sales price condition can be maintained where in access sequence there
is a Customer field.

Modules – For listing purpose promotion can create two types of modules, one is promotion
module to include articles and second one for exclusion of article for particular sites. Both
modules can act only on articles defined in promotion.

SP condition – as described above, in this tab sales conditions assigned to group of SP condition
defined in promotion type definition are maintained. Here you can also maintain rebate
settlement for SD (Rebate agreement) and MM (End of period rebate).

When promotion is created subsequent processing can be executed depending on the promotion
requirement.

 Price activation and Supply Source determination – as name indicate system will active
price defined in promotion and condition records are created. If there is more than one
vendor for each article, you can also create separate purchase prices. Sales price
activation should be done after source determination is performed. The reason of that is
the assignment of purchase price which has been set in promotion item. If item was
assigned to site group that contains more them one site and procurement for promotion
is with external source, purchase price from promotion needs to be activated for all
vendors determined for each site in site group. Supply source (Vendor) is used later on to
generate allocation table. Although considered part of subsequent processing, this is an
optional feature which is not automatically invoked by the system, and can be used
independently of the other subsequent processing functions.
 Announcement – step used to communicate about promotion with stores. Scope of
massage exchange (which can include, notification, request to confirmation) is set as
default in promotion type.
 Listing – not always article is listed in site for which promotion is created. In this case
listing module can be created for duration of promotion (more preciously for duration of
 listing set in promotion). The field with listing has few option to be checked before
promotion specific listing module is created
o Blank – no check against listing rules/condition before listing module is created
o X – check only against listing procedure. Before promotion listing module is
created system does check against listing procedure marked as default for check
in promotion processing.
o Y – check against listing condition. Before promotion listing module is created
system does check against already existing listing conditions. If article is not
listed for site then not possible to processed it further and create listing conditions
 Allocation table – step used to generate allocation table for procurement and/or
distribution of goods from DC to stores.

Price activation:

Split valuation for promotion

Split valuation for promotion is predefined by SAP and contains Valuation category R – Retail
with has two valuation types: Normal (RNORMAL) and Promotion (RACTION). When purchase
orders are created, the system checks to see whether the article is assigned to a promotion. If
so, it proposes the default valuation type (for example, promotion or normal) based on the
valuation category in the article master record and the valuation types assigned to it in
Customizing for Material Management. However, this can be overridden (changed to normal, or
no split valuation).

For Purchase Order promotion determination and proper valuation type is done as a follow-up
function of allocation table.

For Sales Orders determination of promotion (setting per sales area and sales order type) is
working based on the promotion number, promotion valuation type is determined. In case of POS
transaction despite of presents of promotion number in incoming POS transaction system is
taking to GI valuation of normal stock.
For both POS and non-POS sales, the sales document for an article contains the promotion
number, if it exists. If so, the value of the article sold is posted against the promotion stock
account for the site and the revenue is posted to a special promotion account. If a promotion
number does not exist (for example, when the promotion is over), the value is posted to the
normal stock and revenue accounts.

Bonus buy

Coupons entitle customers to a bonus for purchasing merchandise. For example, buy two pieces
and get a third one free, or an extra 20% off on all previously marked-down merchandise.
Coupons are treated as articles in the SAP system. You create an article master data record for
each coupon. Article type COUP is delivered with the standard system. Coupon information is
downloaded to POS at the same time as other promotion data. You configure the POS side to
verify that the required articles are purchased in the correct quantities before the coupon is
applied.

From promotion point of view use of Bonus buy is seamless. Proper data are first distributed to
POS system and later on POS system is responsible to include proper data into inbound
message. Bonus buy can be created in advance with transaction VBK1 or directly in Promotion.
To Bonus buy in section of prerequisites you assign conditions that makes bonus buy valid.
Usually it’s assignment of coupon article. In promotion if Bonus buy was created in advance then
on tab of coupons you assign coupon article used in Bonus buy.
Coupon article is assigned to coupon distribution profile that tells system how to distribute
discount amount coming from use of bonus buy.

And later on the invoice generated as sales in POS system we see distribution of value of Bonus
buy discount according to used coupon article and it’s assigned profile