Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
Today's reality has brand marketers at all stages of trade promotion sophistication. They span from the least invested, running the same events year after year with few structured plans for growth, to the most progressive, leveraging processes and technologies across their enterprises, and using business intelligence and robust analytics to run predictive models and collaborate with retailers to maximize event planning and trade spend performance.
Why become best in class? Three reasons, observed Rob Bois, former director
of product marketing, MEI, citing an Aberdeen TPM Benchmarking Survey:
- The best way to perform post-promotion analysis is with granular data. Best-in-class CPG companies are 1.5 times likelier to have access to shelf-level promotional data.
- Twice as many best-in-class companies (35 percent vs. 18 percent) manage trade promotion funds at the SKU or unit level and store level, rather than at the region or banner level.
- Nearly twice as many best-in-class companies (33 percent vs. 19 percent)
capture and measure promotion effectiveness with profitability and ROI measures
as opposed to looking at pure lift volume.
Mr. Bois shared his insights on a recent webinar, "Tackling Trade Spending in the CPG Industry," which he hosted with Don Lanham, director-consumer products, Clarkston Consulting, and Bill Schamp, also a director-consumer products at Clarkston.
"You can't get to any of these three without having a dedicated strategy around process improvement and technology adoption," added Mr. Bois. "It's about improving how you collect data, at what level, and how to assimilate it throughout your organization through a demand-signal repository or a TPM tool that helps you automate and analyze promotions after the fact."
But CPG companies need to get "their house in order" before committing to TPM (Trade Promotion Management) software. "TPM as an enterprise software category is a lot different than the types of software implementations CPG may have done in the past, such as ERP, financial, supply chain or demand planning, Those are fairly disciplined processes," explained Mr. Bois. "Because TPM spans sales, marketing, finance, trade finance, supply chain and demand planning, it has to meet the needs of many different parts of the organization [with] different goals and business processes in place."
Some critical gaps exist between the "importance of trade promotion technology features" and the "effectiveness of current-system performance," according to the same AMR study. The reporting function showed a 15-point gap (77 percent importance vs. 62 percent effectiveness), as did system of record/fund management (72 percent importance vs. 57 percent effectiveness). Spend control showed an 11-point gap (73 percent importance vs. 62 percent effectiveness).
"Yet this isn't a reflection on any of the TPM applications used. Technology could be vital in fixing the first two issues. Good process disciplines could help improve the third," said Mr. Bois.