Strategies to Improve Trade Promotion Performance

Strategies to Improve Trade Promotion Performance

By Wendell Simmons

It's no secret that the last few years have been very challenging for brands and retailers struggling to grow shareholder value in a sluggish economy. Costs at every stage of the supply chain have been scrutinized, scrubbed and optimized to hold down consumer prices, and as a result, margins are razor thin. For these brands, further investments in operational excellence will have diminishing returns. So where do the brands go from here?

The second largest cost (typically 10-20%) for most consumer brands is spending on trade promotions with the retailers. Historically, retailers have not rewarded brands that attempt to reduce promotional spending because this "income" directly impacts the retailer's bottomline. If reducing spending significantly is not realistic, the alternative is to drive more top-line revenue from these promotions.

According to IDC1, Consumer Packaged Goods (CPG) executives are focusing their attention on developing and executing better performing promotions. A striking observation from the survey is that improving internal collaboration ranks higher than collaboration with the retailer.

Recurring meetings, phone tag, emails, and lost spreadsheets requires everyone to manually manage their own communications, verify data, and keep track of whose in-the-loop, instead of focusing on the work at hand. This "collaboration tax" on the organization encourages operational silos when teams just "do their own thing" instead of coordinating.

We can alleviate the collaboration tax by replacing e-mail, attachments, v-mail, and sticky-notes with a Customer Relationship Management (CRM) system which in addition to the obvious benefits of customer management, can seamlessly support internal processes as well. Tools like Microsoft Dynamics CRM provide the infrastructure to manage data from operational systems and be the internal communications hub.

Fullscope EDGE TPM merges full trade promotion management (TPM) functionality, i.e., Budgeting, Planning, Execution, Settlement and Insights, with all of the collaborative benefits that Dynamics CRM has to offer.

1 Source: IDC Manufacturing Insights and CGT, 2013

Read Wendell's previous post, CRM Trends in CPG.

Trade Promotion Management, trade promotion management