What is negative drag product in SAP CA-DDF-RT - Demand Data Foundation for Retail?

SAP Term: negative drag product

• Component: CA-DDF-RT

• Component Name: Demand Data Foundation for Retail

• Description: A product whose sales drop because another product is put on promotion or added to the assortment. The sales of this other product driver product increase and thereby take away from the sales of the negative drag product. This effect is referred to as "product cannibalization". Example: A specific brand of mineral water is put on promotion and its sales increase, while the sales of the competitor's brand of mineral water decrease.

Smart SAP Assistant

• Key Concepts: 
  Negative drag product is a term used in the Demand Data Foundation for Retail (CA-DDF-RT) component of SAP. It refers to a product that has a negative impact on the demand for other products in the same category. This can occur when a product is overstocked, or when it is priced too low compared to other products in the same category. 
  
  How to use it: 
  Negative drag products can be identified by analyzing sales data and comparing the performance of different products in the same category. If one product is consistently underperforming compared to others, it may be a negative drag product. Once identified, the product can be removed from the inventory or its price adjusted to better align with other products in the same category. 
  
  Tips & Tricks: 
  It is important to consider the context when identifying negative drag products. For example, if a product is overstocked due to an increase in demand, it may not be considered a negative drag product. Additionally, it is important to consider external factors such as seasonality and competitor pricing when evaluating the performance of different products. 
  
  Related Information: 
  Negative drag products are related to other concepts such as cannibalization and price elasticity. Cannibalization occurs when one product takes sales away from another product in the same category, while price elasticity measures how sensitive demand is to changes in price. Understanding these concepts can help retailers better manage their inventory and pricing strategies.