In this blog we’ll expand upon the earlier blog that addressed the "spreadsheet hell" associated with analyzing promotions. The inability to optimize trade spend across all retail segments costs companies thousands of man-hours and plenty of money that can't easily be justified.
What we hear is “I want to take a look at all of the trade spend we have anywhere money is spent.” Well in today’s world, without an automated process to bring that data together, you simply can’t do that. There is not enough time in a day and not enough resources in the company to bring together all the needed data on a regular basis to do something like that. Every trade promotion analyst understands exactly what we're talking about when we refer to "spreadsheet hell."
In addition, it’s difficult to align trade funds with the actual consumer events. This leads to inaccurate results and costly decisions. You might be using a planning application like Promax, Atask, Siebold or others. Those plans need to be aligned with the actual consumption and shipments.
In addition, you need to understand how the blending of your various EDLP (Every Day Low Price) rates are working. You also have to calculate your “grouped event” ROI or return on investment. By “grouped event” I mean with the retail event. We’ll address that in future blog.
All these things lead to an inability to execute. You’re going to have lost revenue and profit, that’s a certainty. You’re also going to be operating blindly or best case, on a hunch.
Just as importantly, you’re not going to have the ability to interpret results. Not to your retailer and not to your internal management teams.
A CPG company needs to understand which promotional tactics are best suited to which product categories and retail channels.
In this chart from The Nielsen Company we’re looking at Pricing Tactics. We are looking at the Food Channel and we have products that are greater than $5 and products that are less than $5. We are looking at them by display, temporary price reduction and feature ad. Notice how consumers are reluctant to buy items on display or the temporary price reductions for the higher priced items. According to this chart, those tactics are not a great strategy if your product is over $5, at least for the display or temporary price reduction. For feature, it’s not too bad.
Does that mean all price reductions and displays are failures? Do you know which ones are successful? Again, this is a very generalized chart. Although this is telling us that it doesn’t look like price reductions and displays are a fantastic idea, there could be some that are actually performing very well.
Follow my next blog as we continue to explore Post Promotion Event Analytics. And join us on our Post Promotion Event Analytics Demo.