4 Myths About Trade Promotion Optimization that Are Jeopardizing Your Trade Investment

Topics: Optimization, Management, Trade Marketing

A common theme among CPG companies is a desire to deliver stronger results from their trade investment, but being reluctant to consider software solution alternatives due to misconceptions about the tools that may help them achieve these results. Unfortunately, these misconceptions put their trade investment at risk by allowing their competition to focus on growth while they focus on treading water at best.

One approach to maximizing your trade investment is to adopt an analytical approach to post analysis and planning by adopting a Trade Promotion Optimization solution that will deliver an annuitized quantified return. No matter the breadth of your human resources or the limits of your current trade technology, a TPO solution has the potential to move separate CPG companies from their competition...

That is, if they can get past these common myths regarding Trade Promotion Optimization.pexels-photo-518959.jpeg

1) My company is too small

A common misconception among companies is that adopting a TPO system will require additional resources from implementation to maintenance.  Whether your company has a smaller trade department with a little as a single person managing trade or has teams of analysts crunching numbers to better understand your trade spend, one of the primary functions of a TPO solution is to increase efficiency. Implementation of a TPO solution will automate manual processes, such as data compilation and eliminate redundant error prone data entry during the planning process, making them much more efficient and manageable.

2) My TPM system can already do this

The fact of the matter is, a TPM solution simply cannot do what a best in class TPO solution can. At its core, a TPM system is largely transactional; it’s an electronic checkbook used to clear deductions and log spending. On the other hand, a TPO system is prescriptive in nature, meaning that it goes beyond merely keeping track of data utilizing features such as predictive analytics, what-if scenario planning, and event and calendar optimization, using the power of constraint-based modeling to proactively use data to improve results. Unfortunately, many companies are led to believe that their existing systems have these capabilities only to prolong their ability to gain useable insight as they wait for empty promises to come true.

3) We don’t need a TPO solution because we are still working on understanding our trade spending

Optimization is one of the powerful capabilities that are part of a TPO. However, thinking that a company will jump from not having any post-event analytics or a planning tool to optimizing promotions is overwhelming. In truth, a company doesn’t have to wait until they get their TPM data under control to adopt a TPO solution. A TPO solution provides a company with near real-time real accurate post analytics identifying inefficient spending tactics, providing the framework for accurate optimized future predictive plans.

4) Our sales team won’t use it

A TPO solution should be user friendly. An intuitive interface makes it easy for sales teams to view their KPIs and tweak customer plans. Furthermore, it eliminates redundant entries and provides the ability to create and compare multiple customer plans to find the optimal promotional mix. In regards collaborating with retail customers, a TPO solution helps sales teams improve relationships with retailers by providing predictive retailer KPIs to encourage joint business planning, which in turn improves the performance of the manufacturer’s business.

The reality is that companies who adhere to the basis of these misconceptions as truth risk placing themselves behind in the competition by continuing to run on a trade investment process that is blind and inefficient. The future is not coming, it’s already here, and it involves CPG companies wielding data with confidence and maximizing results with a TPO solution. With that in mind, now is the time to start optimizing the future, as the CPG industry is at a crossroads and those who fail to pivot will find it difficult to regain traction.

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