One article to understand the promotional system architecture design

Hello, I'm Master Tang~

By the time you get to the technical second interview, the interviewer will basically start digging deeper into the projects you've worked on before.

For example: what is the business context of this project? How was your system architecture designed? What specifically did you do in this project? Is there anything that stands out?

Therefore, it is very important to be able to figure out and explain the project you are involved in as a whole. The more comprehensive your grasp of the project, the more the interviewer will recognize your ability.

Promotional Business Overview

What is promotion?

Promotions are used by businesses to entice consumers to shop in order to get more people to know and buy their products so that they can sell more. There are various methods of promotion, for example, in the form of price discounts, freebies, coupons, discounts, buy one get one free, etc.

Especially in the new retail industry, promotions are even more important. Since new retail is a combination of online and offline, customers can see promotions online, and then experience and purchase products in physical stores. The linkage between online and offline can further increase the chance of customers' purchase.

The value of promotion

Promotions are a powerful operational tool that can help operators achieve multiple goals, including attracting new users, increasing conversion rates, activating users, increasing retention, and promoting distribution. Promotions can also be used to effectively promote products, increase sales, increase unit prices, and clear out slow-moving inventory. The achievement of these goals is crucial for operators, and therefore promotions are considered an important strategy.

For consumers, promotions mean:

Can save money: Promotions allow users to buy things at a lower price, especially during holiday sales, which can save a lot of money.
Trying new products: Generally, new products are accompanied by promotions, which reduces the cost and risk of users trying new products. Users are more likely to try a new product during a promotion, and even if the product fails to meet expectations, the lower price means less loss.
Shopping is more fun: Promotions are often accompanied by novel shopping experiences, such as special packaging, limited edition products or value-added services. These add to the fun of shopping and enhance user satisfaction.
Decision Simplification: When faced with multiple choices, promotions are often an important factor in a user's purchase decision. Especially for consumers who are neutral about multiple brands or products, promotions provide a clear motivation to buy.

For merchants, promotions mean:

Brand image building: Sensible promotional activities can strengthen the positioning of an item in the market. For example, high-end brands can maintain their rarity through limited discounting activities. Creative promotional activities can also enhance brand image and attract specific target groups.
Increase market share: Promotions can help new brands and products rapidly expand market share and increase awareness.
Understanding market response: By observing the impact of promotions on different products, companies can obtain important market information about product popularity, price sensitivity, and so on.
Clear inventory quickly: Promotions can speed up the sale of merchandise, especially for seasonal or soon-to-be-outdated products, so that inventory buildup can be reduced.

The relationship between promotion and marketing

Promotion is a part of marketing strategy that focuses on short-term sales growth. It directly stimulates consumer purchasing behavior through various means and activities, such as discounts, coupons, buy-one-get-one-free, and limited-time sales.

The purpose of a promotion is to increase short-term demand for a product or service, to boost sales, to clear inventory, and to increase market share over a specific period of time. Promotions are usually short-term, targeting specific products or services, and are often urgent, encouraging consumers to make purchasing decisions within a limited time frame.

Marketing is a much broader concept covering everything from market research, product development, pricing strategies, promotional activities to sales channel management. The main objective of marketing is to satisfy consumer needs and maintain customer relationships over time by building brand recognition and loyalty. Marketing strategy not only includes promotional activities, but also involves advertising, public relations, brand building, market positioning and many other aspects.

Marketing is more focused on long-term strategies than promotions and aims to achieve sustained business growth by understanding and meeting market needs.

Promotion Scene

In the new retail space, we are faced with diverse scenarios for the use of promotional tools, each designed to support different types of marketing campaigns. For example, special promotions, spike campaigns, full-price discounts, buy-to-let campaigns, full-price discounts, coupon distribution, and so on.

However not every promotional tool is suitable for all marketing scenarios. In fact, each tool has its own specific scope of application and scenarios for maximizing results. Therefore, choosing the right promotional strategies and tools is critical to achieving operational goals, which requires an in-depth understanding of the characteristics and limitations of each tool to ensure that our promotional activities are effective in meeting market needs.

For retail merchants, the core objective is to market goods (merchandise) to consumers (people) more effectively, and the goal of promotions is to improve the operational efficiency of that process.

Promotional scenarios at different stages of the consumer lifecycle:

consumer lifecycle	Promotion Scene	Promotional tools
Consideration stage	User recruitment, prompting potential users to buy the product or service	Newcomer Coupon, Membership Gift
Purchase stage	Motivate users to make buying decisions	Packages, group tours, and gifts with your order
repurchase stage	Incentivize repeat purchases and enhance customer loyalty.	Membership Levels, Membership Points, Coupons
retrieval stage	Recall of potentially lost customers	Special Coupons

Promotional scenarios at different stages of the product life cycle:

consumer lifecycle	Promotion Scene	Promotional tools
introductory phase	Promote new products in the marketplace and increase consumer awareness and interest in new products.	New product coupons, seconds, pre-sale
growth phase	Quickly increase sales, strengthen market share and differentiate from competitors.	Free Shipping, Plus Purchase, Second Piece Half Price, Discounted Packages
mature stage	Maintaining product market share in a competitive market.	Free Shipping, Plus Purchase, Second Piece Half Price, Discounted Packages
recession (in economics)	Clear inventory to make room for new products.	Limited time discounts, packaged at one price

Classification of promotional tools

When exploring the business of promotions, let's start by making it clear that at the heart of promotional activities is the provision of offers. These offers come in a variety of forms, and they are designed to fit different market scenarios and achieve different business objectives. For example, some promotions may offer direct price reductions, while others may require consumers to meet certain purchase thresholds in order to take advantage of the offer. Different forms of promotions are not only differentiated at the business level, but also require different treatment in system design.

Before we delve into the design of marketing tools, we need to categorize promotional campaigns meticulously. From a front-end experience perspective, different types of campaigns require different design priorities. And from a back-end system perspective, the rules engine needs to handle complex logic based on different categorizations.

Depending on the form of the offer, promotional tools can be further subdivided into:

Single product level: Provide direct price reductions for a single product, such as one-bite prices, direct price reductions, discounts, and seconds.
Order level: Offers based on the total amount of a group of items, such as full discounts, discounts, free gifts, markup purchases, and so on.
Credit Category: Provide credit on the final payment amount of the order, such as using coupons, balances, red packets, points, etc.
Rebates: Provide rebates based on the paid amount of the order or a specific strategy, such as full rebate points, full rebate coupons, and so on.

Understanding these categorizations is critical to designing effective and well-targeted promotional strategies, and also helps us to better implement them in our system architecture.

How do promotions work?

A promotional campaign involves a number of components and consists of the following stages:

Promotional strategy planning:First, the objectives and expected results of the promotion need to be clearly defined, such as boosting sales, increasing brand awareness or clearing out stock. The campaign will be conducted in accordance with these objectives. Secondly, the target audience needs to be identified. For example, for new customers, existing customers or a specific group of people. Understanding the needs and expectations of the target audience will enable more effective design and execution of the promotional activities.

Promotional Content Design: Design the content of promotional activities and determine the types of offers, such as discounts, free purchases, and reward points, to attract different consumers. Set the thresholds and conditions for offers, such as minimum spending amounts, specific product offers, or exclusive member offers, to ensure fairness, attractiveness, and incentives to increase spending or become a member.

Promotion Preparation and Promotion: Ensure that there is sufficient stock to support the promotion and prevent sales problems caused by insufficient stock. Prepare marketing materials such as advertisements, flyers and posters to attract and guide customers during the event. Publish promotional information on multiple online and offline channels, including WeChat community, social media, and offline stores, to attract more customers to participate in the event.

Promotion Implementation and Management: Carry out detailed process management of the progress of the promotional activities to ensure that each link can be carried out in strict accordance with the predetermined plan to ensure the smooth progress of the entire campaign. In the process of promotional activities, timely adjustment and change of promotional strategies, and actively solve and deal with various problems that may arise in the promotional process, in order to ensure that the promotional activities can get the best results.

Data analysis and evaluation: Finally, collect and analyze data on the promotional campaign, including the number of participants, sales, and customer feedback. Evaluate the effectiveness of the campaign based on these data and then determine if the objectives were met. If the campaign works well, sink the lessons learned.

Conceptual modeling of promotional systems

By analyzing the promotion business, we can abstract the key conceptual model of the promotion system:

Promotional domain modeling:

Promotional activities: marketing activities organized by retailers to enhance sales of specific products or brand awareness, such as limited-time discounts, special offers, and buy-and-give activities.
Coupon campaign: a marketing strategy in which coupons are issued to entice consumers to purchase goods or to increase loyalty to a brand. Coupons may offer discounts, free trials, extra points, etc.
Activity Stacking Mutual Exclusion Rule: Specifies whether different promotional activities can be applied to a single purchase at the same time, e.g., some offers cannot be used in conjunction with other offers (mutual exclusion), while others can be applied in conjunction with other activities (stacking).

Preferential domain modeling:

Offer model: a specific benefit offered by a retailer or brand to a customer, which can be a discount, fixed amount reduction, etc. Typically, customers must fulfill specific behaviors to qualify, such as purchasing merchandise, visiting a store, referring other customers, etc., with the goal of stimulating sales and rewarding consumers.
- Offer Levels: Categorized into product level, order level, and entitlement level, these levels define how the value of the offer is distributed and applied.
  - Commodity Level: The offer value is applied to a single item or multiple items that meet the offer threshold. For example, in a buy one get one free scenario, the discounted amount reduction will be applied directly to those items bought as a gift.
  - Order Level: the value of the offer is applied to the entire transaction, usually based on the sales total, with a reduction in the previously applied item-level price. For example, if a promotion is $20 off a whole order of $100 or more, then this reduction is applied to the entire order total.
  - Entitlement Level: The value of the offer is applied to an account, usually only for deferred rewards. For example, a customer earns points for making a purchase, which are accumulated in the account and can be used for discounts or redeemed for merchandise in the future.
- Preferential mode: divided into immediate enjoyment, credit, return mode.
  - Immediately Enjoy: Immediately redeem the value of the offer during the transaction, such as full reduction, full discount, full complimentary, etc.
  - Credit: The value of previously accumulated offers is provided as a credit against the final payment amount of subsequent transaction orders, such as the use of coupons, balances, red packets, points, etc.
  - Rebates: Rebates are offered based on the out-of-pocket amount of an order or a specific strategy that can be used on future purchases, such as full refund points, full refund coupons, and so on.
Offer content: Detailed description of the specifics of the offer, such as the discount rate, the amount of discount, free goods or services, etc..
- Types of offer content: price substitution, discounts, fixed amount reductions, points/coupons or other rewards, etc.
Preferential threshold: conditions that need to be met for consumers to enjoy preferential treatment, such as minimum spending amount, purchase of specific goods, purchase at specific time, etc.
- Threshold types: product-related (specific product, brand, category), quantity or amount purchased, time of purchase, sales channel, customer-related (specific customer account, membership level), specific payment method, and so on.

Card Coupon Domain Modeling:

Card Coupon Templates: are used to create basic attributes and rules for specific coupons. The template defines the basic attributes of the coupon, such as expiration date, discount amount, and conditions of use.
Customer Coupon Instances: Coupons issued to specific customers based on a coupon template, each instance is uniquely identified and contains a specific customer and specific conditions of use.

Equity domain modeling:

Customer Benefits Account: An account that records and manages customer benefits such as points, offers, card coupons, etc. under a specific merchant or brand, and is usually used to track a customer's purchase history, points accumulation and redemption.

Why abstract the "preference" model?

Offer rules are usually part of a promotion, why can't they be merged into the campaign model and need to be abstracted into an "offer" model?

The business focus is different: while the rules of the offer are usually part of the promotion, the promotion is essentially a call to action to the customer and promises a discount if the customer fulfills specific behaviors. Promotions are primarily concerned with engaging consumers and may encompass promotions, marketing programs, and specific sales goals. Offers, on the other hand, are specific discounts, rebates, point accruals or other benefits that customers actually receive.
Flexibility and Extensibility: Treating offers as an independent model allows for more flexibility in extending the promotion system. For example, to add a new promotion, member exclusive offer, you just need to set the member exclusive offer threshold and offer content based on the existing offer model, without affecting the existing offer processing logic. At the same time, the offers can not only come from promotions, but also from other scenarios, such as the offers brought by membership levels. By treating the offer as an independent model, the offer business can be decoupled.
Simplify accounting and financial processing: from an accounting and financial point of view, different promotions may be handled completely differently. The offer model is separated from the others, also in order to simplify the accounting and financial processing, and to standardize the processing for different offer models and offer levels.

Overall Architecture of Promotion System

The application layer is responsible for receiving user requests and providing the appropriate services and functions, modules include:

Promotion Management: Responsible for creating all kinds of product-level, order-level, credit-type and rebate-type promotions. Through this module, merchants can flexibly design and adjust the content and form of promotional activities according to market demand and sales strategy.
C-end transaction process: provides customers with a range of offer calculation, entitlement credit and entitlement rebate service capabilities.
- Offer calculation automatically calculates the final offer amount based on the purchase amount and the offer rules.
- Equity Credits allow customers to use their equity against the order amount, reducing the total amount paid.
- Entitlement Return According to the entitlement rules set by the merchant, a portion of the customer's amount during the transaction is returned to them as an entitlement to be used again in the future, e.g., points, red packets, set points, etc. These service capabilities can enhance customers' shopping experience and increase their loyalty to the brand.
Data Analysis: Responsible for analyzing the effectiveness of promotional activities and optimizing promotional strategies. Through in-depth data analysis of promotional campaigns, it is possible to understand which strategies work best to increase sales and market share. The results of these data analyses will provide decision makers with valuable insights to help them make more informed decisions.

The domain layer is the core of business logic, handling the core business logic of the promotional system and precipitating reusable service capabilities, modules include:

Promotion Domain: Provides the ability to manage, promote, set activity constraints, overlay mutual exclusion settings, etc. for promotions.
Preferential domain: Provide the ability to set up preferential rules, determine preferential thresholds, calculate various preferences, and validate preferences.
Card Voucher Domain: Manage card voucher templates and the lifecycle management of card voucher instances, including issuance, write-off and expiration.
Entitlement Domain: Manage customer's entitlement accounts, such as points, bonus packs, set points, etc.

The relationship between a promotional system and its dependent systems:

Customer System: Provides basic customer information, purchase history, preference settings, customer level and other information.
Organizational structure: Promotional systems usually need to be tailored to specific promotions for different departments, regions, and stores of the organization.
Merchandise system: Provide merchants with price, classification, description and other promotion-related merchandise information.
Inventory System: Promotional systems require inventory data from the inventory system to ensure adequate stock levels of campaign items. Promotional activities are usually closely related to inventory levels, especially in scenarios of inventory liquidation and hot sale of merchandise.
Order system: During the order creation and checkout process, the logic for calculating and validating the offer is handled.
Data systems: Promotional systems rely on data systems to analyze historical data, predict the impact of promotions, and measure the effectiveness of promotions.

summarize

This paper directly discusses the design of the promotional system.

First, the differences between promotion and marketing are analyzed and the importance and complexity of promotional activities in new retailing are highlighted. Then, various promotional tools and their application in the consumer and merchandise lifecycle are detailed.

Second, the operation process of promotional activities was discussed in depth, including strategy planning, content design, preparation and promotion, implementation and management, data analysis and evaluation.

Finally, an abstract model of the promotion system is proposed and its components, such as the offer model, the card voucher model, etc., are explained in detail. The necessity of abstracting the "offer" model is also explained, and the general architecture and dependencies of the system are presented.

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