Retail, CPG and Logistics

Dominate trade promotions with advanced analytics

Data is powerful. Big data that allows you to turn numbers into actionable insights is a veritable game changer. It is no surprise that industry leaders have used data consistently to create winning strategies for increased ROI. The good news is you can do this too as we discuss about the right trade promotion management (TPM) and analytical tools that can excute such tasks.

TPM in a nutshell

TPM refers to the processes and technologies that consumer packaged goods (CPG) manufacturers leverage to plan, manage, and execute their promotional activities in collaboration with their retail partners. Promotions typically include:  

• Physical displays in stores
• Price discounts or offers
• Bulk purchases
• Onsite events
• Retailer sales competitions

TPM focuses on three key areas:

• Developing the guidelines for funding and budget structures to plan and execute promotions
• Building a multilevel plan for promotional expenditure and volume
• Activating promotions in phases ranging from execution to monitoring and adjusting the promotional activities based on their performance

The importance of analytics in TPM solutions

Trade promotions are one of the biggest investments for CPGs. Businesses spend nearly 20% of their revenue on promoting goods and services to retailers, amounting to over $500 billion in spending globally. Predictably, TPM is crucial in driving effective sales strategies.

However, about 59% of businesses lose money on promotional activities, while successful CPG promotions can deliver 5x returns than the least efficient ones. Clearly, there is substantial scope for businesses to bridge this gap and improve ROI through effective retail data management.

Traditional TPM data sources are somewhat fuzzy. They offer fragmented data from disparate supply chain nodes, and there is little transparency regarding their actual impact on sales and profitability. The inability to get the right insights results in suboptimal strategies, leading to margin and volume loss.

Businesses need to re-evaluate their TPM approach and integrate it with AI-driven analytics. This will enable them to obtain predictive, prescriptive, and descriptive insights from available data and optimise their promotional strategies.

Trade promotion optimisation through advanced analytics

The problem with traditional TPM methods is that, in the absence of predictive analytics, they cannot factor in issues such as price hikes, potential supply constraints, or diminishing customer loyalty due to e-commerce growth. Marketing people may excel at creating and running promotions, but baseline forecasts are typically left to guesswork.

Integrating trade promotion with analytics and machine learning allows businesses to automate retail data management. Effective trade promotion analytics drive accurate, prescriptive, predictive, and descriptive insights and enable marketing teams to recognise the valid value drivers in promotional campaigns. TPM solutions integrated with AI and machine learning can help you in:

• Managing promotions with intuitive workflows
• Harmonising transactional data with predictive and prescriptive analytics as trade promotion analytics software can integrate disparate datasets and factor in historical data, resulting in a ‘single source of truth’
• Optimising your existing promotional activities through ‘what-if’ scenarios and post-event analytics

Businesses that invest in effective trade promotion analytics solutions report better visibility of opportunities and risks, improved demand forecasting, and greater control over TPM performance. This can result in 2–5% better revenue and 5–10% sustained improvement in trade spend ROI. Here are some trade promotion management best practices that you can adopt for the right outcomes:

• Ensure accurate data input. Data accuracy determines whether your outcomes are ideal or suboptimal.
• Train your employees to adopt AI and leverage the full power of analytical solutions to drive short-term wins and long-term value.
• Bring in the right stakeholders and advisors during the design phase.
• Choose the right metrics that allow you to analyse your promotions holistically instead of focusing only on shipment volumes.
• Choose the right TPM service provider.

Clearly,TPM with analytics is the biggest game changer in the CPG industry today. With big data, you can fill the gaps in your existing promotional programmes and turn your TPM insights into pathbreaking success stories.

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How can Infosys BPM help?

Infosys BPM has helped its CPG clients recognise and attain the objectives of an ideal TPM operating model. Our comprehensive TPM services include business process advisory and consulting services, along with managed trade promotions and analytics advisory.