CPGmatters: How to Tackle Trade Spending
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
- 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
“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.
Discussion Questions: What are some best practices for vendors in managing trade promotions? What do you see as the barriers to TPM (trade promotion management) software adoption?