Relational Solutions Blog

Trade Spend Can't Be Controlled Without Trade Promotion Intelligence

Posted by Janet Dorenkott

Mon, Aug 31, 2015 @ 03:41 PM

Expressions-16Trade spend for CPG Trade Spend Questionscompanies is typically 15 to 20 percent of a company’s gross revenue.  An A.C. Nielsen chart shows that trade spend is the number one priority for American CPG corporations today.  Controlling that expense is critical. But how can you control it when you can't easily analyze it?

Trade Promotion Management is just that. It helps you manage your trade promotions and dollars. But it falls short on analytics. Why? Because you can't analyze trade, without knowing the results. And you can't know the results without integrating the actual sales with promotional information.

Every CPG company we speak with struggles with this issue. They bought a TPM solution and can't understand why reports aren't giving them the insights they need. 

TPM solutions like SAP TPM, Demantra, ProMax and others are good solutions. They also often provide reports, just like most applications. But those reports are generated based on information that is contained in the TPM application. Those applications can't magically know what your sales are. People often think, well, we buy market data from a third party, like Nielsen, IRI or Retail Solutions. Why can't they just compare the numbers? 

Because it's not that easy. Every data provider massages the data differently. They also have different week end dates. In addition, the data is averaged to accommodate for various differences in the data sources. There are many reasons why it's difficult to just compare the information. The bottom line is the data is different, it's not integrated or aligned correctly with internal data and therefore, understanding true ROI is impossible without an enterprise solution in place.

Post Event Analytics can't be done without first automating the analytics process. 

Trade Promotion Intelligence gives you a foundation for Trade Promotion Analytics. It also gives companies the platform to take it to the next level of true TPO, trade promotion optimization. You can't just skip from TPM to TPO, despite with software vendors tell you. Why? because without a foundation that is integrating, aligning, cleansing and harmonizing POS with internal master data, you won't get accurate results. 

Once POS is integrated with internal master data, it lays the foundation for a more successful TPM solution and can even feed accurate results back to that solution. In addition, you now have the analytics that most people think come with a TPO solution. In fact, you need this analytics phase first. That gives you the foundation to then do true "What if" analysis. 

By having the foundation in place that integrates POS with master data, you now have the ability to integrate trade plan data, COGS, forecasts, shipments and budgets to accurately pinpoint ROI. In many cases, this gives companies 90% of what they were looking for in a TPO solution.

Analysts spend 80-90% of their time cobbling together spreadsheets from all over the place, only to have their numbers questioned. The goal should be to automate that process. Shift the work involved from an art that only a few people in the organization have a good grasp on, to an actual science.

Those of you in the trade marketing area working with promotions will know exactly what we mean when talk about spreadsheet hell! If we can streamline and automate the spreadsheet creation process, then we can avoid the costly, manual, error prone, process of harmonizing disparate data.

All this time analysts spend collecting and integrating all of this disparate data, only to have it questioned is costly to companies. Then they have to spend time justifying the numbers. And every day, week and month, they get to redo it all over again. It's costly, frustrating, unrewarding and inaccurate. 

Learn more about how a Trade Promotion Intelligence foundation that automates the integration of data and report development will help your company improve trade ROI, increase employee productivity and help you provide more value to your retailers during JBP sessions, category management meetings and marketing 

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Topics: TradeSmart TPO, tpo, peat, tpi