Trade promotion calendars are repeated annually for many consumer goods companies.
“Same as last year, with adjustments for Easter,” is often the way it goes.
But it’s worth noting that despite trade promotion spending representing one of the largest line items on a manufacturer’s P&L at around 20-30% of revenue, as many as two-thirds of trade promotions don’t break even.
So it's no surprise that nearly a third of companies are dissatisfied with their ability to manage promotions. Much of this comes down to a lack of analytics.
Visibility is key to managing your trade spend
For a lot of companies, excel spreadsheets tend to be the tool of choice for manually managing trade promotion spend, but it's not always easy to see exactly where the spend is going using this method.
The biggest challenges lie in understanding what's working and what's not and how to weed out and replace poorly performing promotions.
This is where analytics come in. An automated Trade Promotion Optimisation (TPO) software platform can provide the analytics and insights you need to gain visibility and control of your spending and help you identify where your trade spend is going, where it's working, why, and what needs to change.
With access to this level of post-promotion analytics, manufacturers can confidently and quickly answer the following questions:
- Did the planned promotion actually run?
- Did it achieve the expected promotional volumes?
- Were the projected promotional volumes close to the actual volumes achieved?
- Are there competitive products that perform well with ours, or vice versa?
- Was the promotion profitable?
Armed with this information, you can also gauge what works and what doesn't over time and create 'norms' to better understand the impact of the mechanic, timing, seasonality, duration, frequency, and discount depth of your promotions.
Ideally, your analytics would also capture true promotional uplifts as increments, including pantry loading, forward buying, price elasticity, pre and post-promotion volume dips, and cannibalisation of your own and competitor products.
If you would like more information on how your business can improve its promotional performance with an effective TPO, visit www.exceedra.com or contact luke.pocock@telusagcg.com
TELUS is a Corporate Partner of the Drinks Association.