Trade Promotion Management: Maximizing Outcomes with Advanced Analytics

Data is the blood of any business. Big data that enables you to convert numbers into valuable insights is game-changing in the competitive business landscape. It is no surprise that data has given business leaders business players significant new firepower to create winning strategies for enhanced ROI and superior growth. The industry competition is fierce, and the good news is you can stay ahead of the curve with the right trade promotion management (TPM) solutions and analytical tools that fuel your business in the right direction.

Trade Promotion Management (TPM) refers to the multiple disciplines that Consumer Goods (CG) companies leverage to plan, manage, and execute their promotional activities with their retail partners. Promotional activities usually include:

• Offers or price discounts
• Onsite events
• Physical displays in retail stores
• Financial rebates
• Bulk purchases
• Onsite events
• Sales competitions

TPM focuses on three key areas:

1. Developing a framework to allocate funds for planning & executing promotions.

2. Building a multilevel spend and volume plan for promotional activities.

3. Activating phase-wise promotions from execution to monitoring in order to achieve planned revenue gains.

CPG companies invest about 20% of their revenue in trade promotions annually, amounting to over 500 billion dollars trade spending globally. A Mckinsey study in 2017 reveals that 30% of CPG players prioritized trade-promotion optimization through big data and advanced analytics. The important question is how to make it happen to achieve significant business value.

The most effective approach is to have a holistic view of existing promotions and transparent data on their operational functions and organization. It is imperative for CPG companies to build an analysis framework with crucial KPIs that enables them to generate standard evaluations for promotions.

At Polestar Solutions, we take a transformational approach to trade promotion management covering end-to-end processes, advanced technology, and CPG analytics to plan, execute, and optimize trade spending.

Businesses that re-evaluate their TPM approach by integrating its AI-powered analytics will position themselves to gain granular insights and capture unmatched value. By leveraging analytics, we help organizations answer critical questions about TPM implementation that include:

• Are we using advanced business processes and technology across the supply chain, sales, marketing, and finance operations?
• Are we ensuring that the right business KPIs are delivered at the right time?
• Have we put in place business processes that ensure finances & budgets are adhered to?

Organizations can improve the impact of trade promotions through advanced analytics consulting and predicting future results based on historical data. The goal is to achieve optimized promotional spending across the portfolio and the customer base with direct integration into planning.

This allows organizations to better understand how seasonality, distribution, and promotional levers drive sales. Optimizing how organizations design promotion programs and use post-event analysis to develop promotional guidelines is just as important as automatically prefilling the baseline for future periods to automate volume planning.

Companies will thrive if they can harness scenario planning to simulate future promotions and identify the best parameters.

The issue with traditional TPM techniques is that, in the absence of predictive analytics, they are unable to account for variables like price increases, prospective supply restrictions, or declining consumer loyalty as a result of the expansion of e-commerce.

By integrating trade promotion with analytics, businesses hold the power to automate retail data management. Marketing teams can identify the real value drivers in promotional activities with the use of effective trade promotion analytics, which generate precise, prescriptive, predictive, and descriptive insights.

You can benefit from TPM systems that incorporate AI and machine intelligence in:

• Employing logical procedures for managing promotions.
• Integrating transactional data with prescriptive & predictive analytics as trade promotion analytics software can combine massive datasets from disparate sources to create a single source of truth.
• Optimizing promotional campaigns through post event analytics and conducting what-if scenarios.

Organizations that invest in effective trade promotion analytics solutions report improved forecasting, increased visibility of opportunities and risks, control over TPM performance, and better ROI.

This can lead to a sustained improvement in trade spend ROI of 5–10% and an increase in revenue of 2–5%. Organizations can consider trade promotion management practices to achieve desired outcomes:

• Ensure precise data entry. Whether your results are ideal or unsatisfactory depends on data accuracy.
• Develop AI adoption among your employees and make the most of analytical solutions to generate long-term value.
• Involve the right stakeholders during the design process.
• Choose the metrics that will enable you to analyze your promotions holistically rather than only concentrating on shipping volumes.
• Choose the right TPM partner for your business.

Inevitably, TPO/M using advanced analytics can turn the tables for the CPG industry. With big data, you can bridge the gaps in your existing promotion campaigns and turn your TPM insights into record-breaking success stories.

CPG companies need to establish an infrastructure to manage promotions that includes analytics capabilities to derive a process to translate the insights into actions and performance management to drive sustained impact.

Polestar Solutions helps its CPG clients gain a competitive advantage with a razor-sharp focus on leveraging the potential of analytics to drive promotional effectiveness. If you are a forward-thinking CPG data analytics player looking to set up effective TPM strategies for profitable growth, we’re happy to help you.