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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.

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Relational Solutions Blog

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Promotion Analytics & Measuring Promotion Effectiveness

 


In this trade promotion blog, we take a look at channel tactics and address promotion effectiveness. We'll address issues related to measuring p
romotion effectivness so you can determine where to direct funds and avoid the pitfalls of blindly investing into ineffective promotional tactics. 

We often see companies just continuing to invest in the same promotions year after year simply because they assume it’s working. They really don’t know the results of those promotions, they’re just acting on hunch. Over time, they just blindly continue to invest in the same promotions because it’s what they’ve always done.

In this chart from The Nielsen Company, we see three different retail channels; food, drug, and mass. The chart shows the quality of response from different promotions.

If you look at the drug channel you can see  two different trade promotion tactics. One related to a feature ad and the other to an in-store display. Notice that the feature seems to be working out pretty well.  The in-store display does not seem to work out as well for the drug channel. 

The chart depicts the difference between how consumers react to the feature ad versus the in-store display by retail channel.  In the drug channel, feature ads are considerably more effective than the in-store displays versus in the food channel. This brings up many questions. “How much is it costing us to keep running poor performing events?” “In which drug stores are displays effective?” They are obviously effective at some drug stores, but how do you pin point which ones? Many other questions come up in post promotion event analytics. Most of the time, trade promotion optimization solutions, TPO, don't offer promotion analysis.

We often see that analyzing the data is so cumbersome because to truly understand it, you need to pull in a variety of information. As a result, analysts simply don’t have time to do it all. The result is poor coverage. They get minimal, required, results for a small percentage of one or two of their top retailers. Then for the rest of the stores and retailers, they simply use whatever they did in the past. Only a small percentage of retail coverage is actually getting promotions based on facts. This is a huge problem and massive expense for CPG manufacturers and even for retailers.

Having an integrated system that brings together all the needed components on an automated basis, allows you to increase coverage. We’re not talking about looking at just a few accounts, and a few promoted product groups. With an automated system, you have the ability to look at all places where money is spent. The goal should be to increase the return on investment, ROI, across all retail accounts. Relational Solutions offers our Post Promotion Event Analytics solution to address these issues.

Optimally, we would also have the ability to align actual results to the plans. You want to be able to put your plans side by side in order to understand the accuracy of the plans.

To truly analyze promotions and measure promotion effectiveness, you have to understand the performance versus the expectations. You also have to understand the impact of shipments. Did your items arrive on time for the promotion's start? Did we ship too much? Did we ship too little? Product freshness is a concern for certain CPG manufacturers.  You want to know what your turnover is on products? What is the competitive impact?  We need to understand if a competitor is running promotions at the same time. If so, were our promotions still successful?  Were theirs more successful?  How does our product affect an entire category?  What made that promotion a big win for us? You also want to know if it was a win for the retailer? It needs to be a "win" for both of you. Most importantly, you need to understnad if it was a "win" at all. You need to discover if you've been wasting your trade dollars. Perhaps the category dropped when our product went on sale.  These are all examples of things we need to understand.

Stay tuned for our next blog on promotion analysis and learn how we can leverage POS and shipments to get you information on your promotion effectiveness every day.  Click below to schedule a demo of Relational Solution's, Post Promotion Automation and Analytics solution.

Request A Demo Post Promotion Event Automation & Analytics

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
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