Retail, CPG and Logistics
Reimagining end-to-end trade promotion management with Business Process as a Service (BPaaS)
In today's fast-paced business environment, driving value through effective revenue growth management (RGM) and TPM initiatives is critical for consumer-packaged goods (CPG) organizations. As technology, innovation and digital disruptions continue to shape the CPG organizations, it is increasingly important to know the latest trends and understand the key components of RGM and TPM. In this blog, we will discuss what RGM and TPM are; their key components; the best practices for leveraging technology, innovation and digital disruptions; and how TPM strategic initiatives can help organizations reimagine the business value delivery through value-driven service offerings.
An overview of revenue growth management
Revenue growth management (RGM) can be defined as the increase in revenue by leveraging the right brand, portfolio pricing, price pack, channel mix, and trade promotion optimizer, to the right consumer, at the right price, and on the right occasion.
The demand for revenue growth management is increasing with the rise of tools, technologies, and digital disruptions in the CPG industry. CPG organizations are leveraging latest digital technologies to transform business and IT processes; they are investing in advanced analytics and domain best practices to gain competitive advantage, reduce costs, and maximize revenue.
Key components of RGM include econometric models to determine pricing power of a brand in comparison to competition and relative price elasticities of a specific channel. RGM simulates new variant at different price points and consumer benefits, optimizes assortment for channel or key customer, and maximizes sellout by optimizing spread of mechanics across the depth and width of trade promotions.
RGM helps CPG organizations transform by running leading-edge sales processes to drive business growth and deliver competitive advantage.
Trade promotion management as a lever to drive value in revenue growth management
Trade promotion management (TPM) is a critical part of any CPG organization's revenue growth management (RGM) strategy. TPM involves managing promotions, pricing, and trade agreements to increase revenue, reduce costs, and maintain customer loyalty. It is important to understand the key components of TPM and how it can drive revenue growth.
The key components of TPM include planning, execution, financial management, and analytics. The first step is to develop a trade promotion plan that outlines the goals, objectives, target customer segments, and key performance indicators. The plan should then be executed by determining the promotional tactics that will be used, such as discounts, rebates, and other incentives. Promotional financial management pertains to managing deductions and claims and resolving disputes. Finally, the results of the promotion should be analyzed to determine the tactics which were most effective.
TPM can help in driving revenue growth by:
- providing visibility into the impact of promotions, pricing, and trade agreements. This visibility allows CPG organizations to optimize their promotions, pricing, and trade agreements for maximum profitability.
- providing insights into customers’ buying behavior and preferences, allowing CPG organizations to tailor their offerings to meet the needs of each customer.
The following are the key challenges faced by the CPG organizations in managing TPM, according to KPMG and POI Research.
- Less to no value from data (around 40% of promotions are losing money)
- A fragmented process customized to local market conditions (45% of organizations indicate most aspects of TPM are highly time consuming)
- Lack of integration with TPM planning, execution, and financial systems (87% of organizations still rely on Excel to augment their TPx solutions)
- A complex data challenge (75% of organizations don’t have an automated post-event analytics capability)
A well-structured TPM strategy and execution is key to a CPG organization’s objective of revenue growth and should consider the key attributes such as:
- Holistic, integrated IT + business process management services across consulting, advisory, technology, transformation, and managed services (BPaaS services)
- Services consolidation/centralization (GBS/SSC)
- Use of cloud-based solutions in allowing organizations to access their data in real-time and make more informed decisions
- Utilizing automated tools to simplify the process of managing promotions, pricing, and trade agreements and thereby streamlining processes to drive efficiencies
- Transformation through artificial intelligence (AI) and machine learning (ML) models can be used to identify new opportunities and optimize sales
- The increasing focus on tools, technology, TPM platforms
- Pre- and post-event advanced analytics and uncovering insights and valuable trends
- Digital disruptions in the TPM domain
- Best practices for TPM, such as identifying key metrics to measure the effectiveness of promotions, compared to the best-in-class benchmarks
- Leveraging data analytics to gain insights into customer behavior and preferences
- Use of digital channels for promotional activities, such as the use of mobile apps and social media platforms, thereby increasing the reach of their campaigns to drive more sales
- The emergence of blockchain technology paving the way to more secure and transparent transactions
- Leveraging ecommerce platforms to increase customer base and improve the bottom line
Overall, with the right strategies and technologies, TPM initiatives can be successfully implemented, adding significant value in driving revenue growth and reimagining the business value delivery. By staying up-to-date on the latest trends, as well as with the best practices, organizations can stay ahead of the competition and maximize their success.
Revenue growth management (RGM) and trade promotion management (TPM) have become increasingly important for CPG organizations, offering a range of opportunities to drive business growth. Leveraging the latest trends in the TPM and RGM domains, along with strategic initiatives, technology, and digital disruptions, organizations can reimagine the value they deliver. By following best practices for leveraging RGM and TPM initiatives, CPG organizations can measure and optimize the impact of their strategic initiatives, ensuring that they remain competitive and continue to drive business growth.