How do promotions affect a forecast?

A promotion pulls demand forward as much as it creates it. Units sell during the discount window that would have sold later at full price, so the lift is followed by a trough. Forecasting the lift without the trough overstates the period total and leaves you holding stock bought for demand that already happened.

Model the promotion and the recovery period together, and strip promotional weeks out of the baseline history. Leaving them in teaches the model that the lift is normal seasonality.

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