Brrrr.....its getting cold outside

November has arrived bringing with it colder temperatures and forecasts for the next few months predict it to get much colder, potentially with snowfall. This will have an impact on sales for many brands so planning for it within the marketing strategy is key.

One of the major benefits of econometrics is its ability to measure all factors that impact on sales, not just the media impact. Factors include seasonality, weather, price, promotions, economic impacts, competitor activity and so forth. 

Our client work shows that retailers tend to lose sales when it is cold. In particular, prolonged bad weather, especially snowfall, can bring reductions in revenue of up to -10%.

On the flip side, charities often benefit when it snows, seeing an increase in the number of people donating by direct debit.

Even within brands, different product categories react differently to changes in weather. The chart below shows the impact of a 1 degree Celsius rise in average temperatures. In this case, outdoor product categories benefit from an increase in temperature and indoor product categories see the opposite. 

While we would instinctively predict this relationship, econometrics provides the insights that tell us how 'big' the impact is on sales and within which product groups. This helps brands to maximise sales response by ensuring media is carrying the right product message based on the weather forecast. 

Posted by Deepali Shah, Manager, Business Science