Retail, CPG and Logistics
How Trade Promotion Management and Optimization is a Game-changer for the CPG Industry
The Consumer Packaged Goods (CPG) market has become highly competitive with several players offering a variety of products. In recent years, there has been a lot of emphasis on managing trade promotions in the industry because of the numerous challenges it faces. For example, not only do customers have more choices, but they also expect personalised experiences.
Trade Promotion Management (TPM) and Trade Promotion Optimisation (TPO) strategies have revolutionised the way companies plan, execute and analyse promotional activities.
What is Trade Promotion Management and Optimisation?
Trade promotion and optimisation refers to the process of planning, executing and analysing promotional activities. The purpose of TPO is to maximise return on investment (ROI) by developing strategies and tools to effectively manage trade promotions.
TPO is relevant to CPG companies because it helps drive sales, boost profitability, strengthen trade relationships, manage complexity and gain a competitive advantage in the highly competitive consumer goods industry.
How do trade promotion operations work?
Here is a typical list of steps:
Step 1: Data collection
As a first step, relevant data is collected from various sources, such as historical sales data, promotional activities and performance, pricing information, market data and consumer insights. This data is typically obtained from internal sales and marketing systems, point-of-sale (POS) systems and external market research sources.
Step 2: Data analysis
Next, data is analysed to identify patterns, trends and relationships between various variables. This analysis may include statistical techniques, data mining and predictive modelling. The analysis provides insights into the impact of different promotional activities on sales and profitability.
Step 3: Optimisation
Optimisation entails identifying the right products, pricing strategies, promotional tactics, timing and distribution channels to maximise sales and profitability. Optimised plans focus on finding the right balance between promotional spend and ROI.
Step 4: Simulation and scenario analysis
Manufacturers and retailers simulate different promotional scenarios and evaluate their impact on sales and profitability. They can test different strategies, forecast potential outcomes and make data-based decisions about effective promotional strategies, among other possibilities.
Step 5: Execution and monitoring
During the execution phase, the performance of promotions is tracked and their impact on sales and profitability is measured.
Step 6: Evaluation and adjustment
The final outcomes are assessed and compared with the initial objectives and forecasted results. This helps to identify areas of improvement and make the required refinements for future promotions.
Data is at the heart of TPO processes
It is evident that the crux of the TPO process is data. In fact, big data lays the foundation of TPO. ?;";
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