Despite advances in Trade Promotion management and optimization solutions, many CPG companies still rely on inefficient and error-prone practices including manual data compilation, spreadsheet dependency, and redundant processes. This prevents companies from achieving optimal efficiency and performance in their trade promotion operations. So why stick with something that isn’t working its best?
Like most challenges, companies must weigh if the pain of change is greater than the current pain they are experiencing. For many trade marketers who are already stretched thin by overly complicated practices and increasing demands to both improve and justify results, the prospect of taking on another project is simply too great to consider the benefits that new technologies can offer.
With this in mind, for a project to be worth the undertaking, the long-term benefits have to be explicit, but so must the ability to provide immediate results without additional burden. Enter TPO. Trade Promotion Optimization allows trade marketers to improve productivity and reduce errors through intelligent automation of historically manual processes resulting in exponential improvements to these core responsibilities.
1) Strategy development
Trade marketers might run into trouble with developing effective strategies for trade events and customer plans without an arsenal of optimized plans. By creating a smart library of plans that apply historical and predictive insight, trade marketers can now easily optimize the combination of promotional events to build a sales plan that achieves organizational objectives. This optimization is accomplished by applying the powerful constraint-based models that should be a feature of a TPO solution-resulting in the development of an automated optimized customer plan. Furthermore, additional productivity gains can be made with seamless integration into any TPM or customer planning tool eliminating redundancy from your sales team and enabling plans to easily go from strategy to execution.
2) Monitoring spending efficiency
Being responsible for improving spending efficiency is difficult when data is untrustworthy. However, with a TPO solution, you can eliminate compilation errors thanks to the automated data harmonization of shipment, POS and spending data. Doing so can provide a visualization of non-promoted volume and planned vs. promoted activity leading to more accurate baselines. With this view a user can easily address misinformation and identify poor performing promotions or gaps in your trade promotions program. This includes the ability to identify and adjust for data anomalies that may skew the interpretation of promotional performance and future plans.
3) Forecasting accuracy
Improving forecasting accuracy is more achievable with a TPO solution thanks to predictive planning. Although a TPO solution is not a forecasting tool, with the increased accuracy of your historical data and by applying predictive modeling to future plans, you can calculate an accurate predictive outcome of anticipated volume, revenue and profit as well as an accurate estimate of your full revenue base volume. These more accurate sales plans can be electronically exported to your demand planning team resulting in more accurate forecasts and demand plans.
4) Competitor activity monitoring
As a trade marketer, you want to understand your competition’s activity and identify gaps in the competitive landscape. Without this ability, you cannot consider how simultaneous promotions of your product and a competitor’s affects an outcome. Your TPO solution should automate this comparative view by bringing these data slices together in the same place for a more thorough analysis. Now, you can see how a competitor’s event compares to your own, identifying any cannibalization on your brands allowing you to make key pivots to stay ahead of the competition.
5) ROI analysis
Perhaps one of the most important accountabilities of in a trade marketer is ROI analysis of past and future promotions; a process that becomes near impossible with dirty data. But with a TPO solution, your cleansed and harmonized data can be automatically integrated into a user-friendly interface that calculates and displays the ROI as well as other pertinent KPI’s in real time for all retail customers. This means that through automation you get both a more accurate picture of your promotional event performance and a more complete and accurate picture of the projected effectiveness and efficiency of your annual tradeinvestment.
Ultimately, the business case for Trade Promotion Optimization will be decided on the ability to quantify both a return on the investment of the solution and the improvement to overall trade investment. However, this case will be built on the automation and improvement of the key processes that allow trade marketers to do their jobs of managing promotional outcomes more productively, more accurately, and more profitably.
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