The Value of Effective Trade Promotion Management

A staple in the consumer goods industry, trade promotion is a crucial aspect of increasing sales and growing market share. Brands and manufacturers have the ability to reap numerous benefits from trade promotions, including better bottom-line ROI and increased brand loyalty.

Despite the substantial advantages of well-managed trade promotion, many businesses offer these specialty pricing opportunities off-the-cuff and with very little (or no) tracking or analyzing whatsoever.

Before we hop into solutions, let’s discuss the ins and outs of trade promotion and how it could be doing so much more for everyone involved.

What is Trade Promotion?

Trade promotion covers a lot of things, but, at its core, it’s anything that uses a special pricing approach to increase demand for certain products. There’s a ton of room for creativity within trade promotion, especially when acknowledging that, when well-done, it can boost revenue, increase coverage, and defend market share in highly populated and competitive markets.

What’s considered trade promotion? A lot of things. The most common forms it takes in the retail and foodservice industries includes:

• Discounts, deals, and markdowns (BOGO)
• Deductions/claims redistribution
• Bundles (both pre-determined or customer decided)
• Visual merchandising (i.e. in-store displays)
• GPO discounts
• Incentives to individual stores
• Operator deviated pricing
• Field marketing opportunities
• Rebates (particularly after-purchase rebates)
• Sales contests

As you can see, we’re working with a lot of options here and a lot of ways to drive revenue towards your business – and that hasn’t gone unnoticed. Among consumer goods companies, a pronounced 23% of revenue goes directly to trade promotions. Of the top 50 consumer goods companies alone, more than one trillion dollars is spent on trade promotion.

Yes, that’s a lot of money. That’s also a lot of hats in a clearly saturated market, so, the big question here really is this: how do you stand out? How do you use trade promotions to the fullest with the best ROI possible?

Why, Trade Promotion Management (TPM), of course.

What is Trade Promotion Management?

Trade Promotion Management (TPM) is both a strategy and an art. TPM spans the planning, management, and execution phases of trade promotion, which includes data monitoring, reacting to analytics, performing post mortems on promotions, and then starting all over again.

When using such a large chunk of company budget, basing your efforts off collected data is a must-do and, to be able to compare promotions, the first thing that needs happen is when instituting trade promotion management is standardization.

Standardization of your trade promotions through a strict structure for every promotion, every time eliminates of the chance for human error. This means standardized contracts, standardized letters, and standardized processes before, during, and after each promotion.

The crux here is how difficult this can be to manage (and maintain) in a program not specifically designed to handle it, like a spreadsheet, for instance, which makes a whole host of things more difficult than they should be, like:

• The approval processes
• Presentations
• Data retention
• Salesperson performance (which is often tied to into the trade promotion)

There are also multiple teams and position types that should have access to the information, results, and compliance for trade promotions, including the Finance team, promotion planners, and field sales – all of whom use isolated programs to handle their individual aspects of TPM. This creates a disconnect and can lead to serious frustrations.

Trade promotion is unique and makes up a significant investment and revenue stream in CG industries. As such, it really deserves its own platform to aggregate and disseminate data and information.

So, what to do? We add one more word to the grouping: use a Trade Promotion Management Software.

What Is a TPM Software?

Trade Promotion Management (TPM) Software aids in the planning, execution, analysis, and reporting on trade promotions. It offers many benefits, including improvements in process and planning efficiency, more accurate sales forecasts, and identifying inefficiencies.

Most importantly, though, TPM software uses current data and actionable insights to increase ROI for businesses. Think about this last one for just a moment – with real, live, up-to-date data, that means that trade promotion planners can live-tweak and optimize trade promotions that are underperforming. On top of improving results for running campaigns, they can use all collected data to create better future promotions.

That capability alone is noteworthy.

The bottom line is, if you’re putting significant time, money, and effort into your trade promotions, it’s more than worthwhile to invest in a TPM software to get the most ROI.

How Do You Choose a TPM Software?

There are three huge factors to consider when selecting a TPM software, which are:

• Scalability & Product Ownership
• Data Management & Visualization
• Accessibility & User-friendliness

It’s crucial to do a full analysis of your business’ wants and needs, asking yourself questions like:

• Are you planning to ramp up trade promotions year-over-year? If the answer is yes, how well does the TPM software scale?
• What does the intake of data look like? Is there a lag or is it in real-time? How much of the process is automated?
• What does the data analysis look like? How easy is to read and interpret?
• Figure out everyone in your business who needs access or visualization into your trade promotions and ask what they’re lacking – can your Finance department, who allocates and approves budget, see the results of the spend? Can planners, your creative minds, impact in-field execution?

This complicated process is worth every minute of time spent on it, but you don’t have to (and really shouldn’t) do this alone.

Spaulding Ridge’s Trade Promotion Management Solution

We specialize in advisory and solutions, and we’ve customized a special TPM solution using the Anaplan platform.

Our TPM solution is dynamic, intelligent, and adaptable, allowing for widespread participation and planning to continuously adapt as the market changes. The ability for widespread participation on all levels of the organizations contributes to optimal growth, time management, and decision-making.

Using one central location to create, track, and plan our promotions is beneficial to every stakeholder and team in the trade promotion process. Stakeholders can make informed decisions using scenario and forecast planning. The budget team can use the view current and past promotion budget down to the product level to make effective decisions. Management can use the model to see timelines while tracking promotion overlaps and performance – and that’s just the beginning.

More key advantages in our TPM solution are:

• Upfront validation is automated, with built-in guard rails around types of promotions, refined restraints for budget, number of promotions, and combinations of what promotions can be allowed for certain products.
• A streamlined approval process sifts through promotions and sends them to stakeholders, filtering out irrelevant promotions resulting in a faster turnaround time.
• Simplified presentation capability allows you to easily export promotion data for presentations or sharing.
• More intelligent forecasting results in a better understanding of what you’ll get from promotions in the future.
• Improved ROI thanks to better insights on what the customer is paying versus what your business is paying within the context of the overall cost of the promotion
• Greater visibility into supply and demand so you can better plan when you need to stock up with a connection to the supply chain.

You can see a promotion at the top-level and all the way down, from the store all the way down to the specific product.

It’s time to get the best return possible on your trade promotions. Contact Angela Breard-Chen at Spaulding Ridge to learn more about our customized Anaplan TPM solution today.