Follow Me

[Click to edit the title]

Relational Solutions specializes in business analytics and insights for the consumer goods industry. Specialists in Demand Signal Repositories, Category Management, Trade Promotion Management, TPO, Business Intelligence, Data Integration and Data Warehousing.

Subscribe by Email
Your email:

Subscribe via E-mail

Your email:

Follow Me

[Click to edit the title]

This is the content. This is demonstration text. Click 'edit' above to create your own content.

Relational Solutions Blog

Current Articles |  RSS Feed

Promotion Analytics and "Spreadsheet Hell"

 

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.

 

 

 

Relational Solutions, Inc. 25050 Country Club Blvd, #105, North Olmsted, OH 44070 www.relationalsolutions.com

Challenges in Promotion and Trade Spend Analysis

 

This series of blogs will address post promotion event automation and analytics.

We’ll start with a brief industry overview, including today’s challenges in the Promotion and Trade spend area. Over the course of the next few blogs, we’ll also detail the importance of automating the historically manual process of managing promotional events. Lastly, we’ll address the most important aspect of promotions, that being, the return on investment pertaining to your trade spend. 

Trade spend is typically 15 to 20 percent of a company’s gross revenue.  This chart from A.C. Nielsen shows that trade spend is the number one priority for American corporations today, in the CPG industry.  It’s the highest spend priority and in many cases, it’s the second highest corporate expense next to payroll.  What is Post Event Automation and Analytics?  It is trade optimization that isn’t purely an exercise in implementing advanced statistical models but also an enterprise-wide agreement on processes and metrics. 

Statistical models are great but if you can only apply them to 5 to 10 percent of trade spend your missing 90 to 95 percent of everything else that is going on out there.  That is the problem with looking at it from just a statistical model stand point.  It’s very complex and it’s very difficult to mold the data into those models today. 

We think it’s best to find a framework that applies advanced calculations to multiple downstream data sources. In this way we can shift the promotion planning process from an art to a science, such that supply and demand can more effectively be met.  Rather than having to cobble together spreadsheets from all over the place, we believe the goal should be to automate the 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.

We estimate that about 80 to 90 percent of analyst’s time is spent gathering, collecting and integrating all of this disparate data, only to put it into spreadsheets. Then you have to redo it all over again, every time you want to run those analytics. So you have “data silos.” Every spreadsheet is a unique creation that requires days and weeks of work. These are spreadsheets that companies rely on and use just to run their business. Little, if any time is actually left to spend on actually analyzing the data to learn more about the actual promotion effectiveness. Automating the spreadsheet process frees up analysts to learn more about your business and how to make profitable decisions.

You can follow this blog series which will take you through the issues and solutions in this space. Watch for my next blog that addresses issues related to promotions and the inability to optimize trade spend across all retail segments.

Relational Solutions, Inc. 25050 Country Club Blvd, #105, North Olmsted, OH 44070 www.relationalsolutions.com
All Posts