If I have a client that discounted their product to drive sales (in a few different cities to test price elasticity), then now will return to original pricing. How would you forecast that? I believe it would be important to make sure the discounted pricing isn’t skewing the future forecasts, but would I just not consider them or need to apply a formula to normalize them? Client only uses excel and historical data.

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Should be no different than a historical period where the product was on sale.

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You can normalize it the same way you would normalize for seasonality, except use the promo period instead of the seasonality period

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Depends on what you are trying to forecast

There is a couple of ways you can address it depending on how much data you have.

But the simplest way would be to add a binary flag to the discounted periods as an input to your forecasting model.

I.e. : If discount was active 1, if it wasnt active 0.

That whenever you build your model if you have accounted for everything else you may have a statistically significsnt correlation to demand.

You can of course do A/B testing of you have the time and its really important to figure out whether discount has an impact on Demand or not

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