Optimising the impact of trade promotions on sales using technologies

Optimizing the impact of trade promotions on sales using technologies


Sales using technologies are software that comes in a form of service (SaaS). Those tools and technologies can help you in data entry, emails, scheduling, and etcetera. The relationship between them and CPG companies was not considered a very good one. CPG companies didn't see technology as an essential cost, or as something that brought out productivity and sales. Things are different now, and CPG companies are reaching out toward new technologies such as location-based marketing and big data analytics. CPG companies must now consider trade promotion optimization.


What is a CPG company?

Consumer packaged goods (CPG) companies’ goal is to sell as many products as they can to many customers as they can. Some examples of those companies are Coca-cola, Moleskine, and others. They are facing a lot of barriers and challenges such as the increasing competition from the local brands, consumers demanding the best prices, and inconsistent business strategy.   


What is trade promotion management?


Trade promotion management (TPM), is thought to be different from TPO, but in fact, it should integrate with it. It targets the operational part of the trades, which might include promotions, allocating budgets, retail activity management, etcetera.


What is trade promotion optimization?


Trade promotion optimization (TPO), is a data-driven process, where CPG companies can minimize their spending and increase their ROI (Return on investment) on trade promotion. Brands can focus on their strategies to promote their trades, creating a cycle of improvement, upping their insights, and predicting clear goals.


TPO and TPM should exist together. TPM solutions cannot integrate data like POS and weather, in addition to analysis and what-if scenarios. Integrating with TPO solutions will help remove these barriers and balance the brand activities.


CPG companies should start relying more on TPO. According to the Promotion Optimization Institute State of the Industry Report, CPG companies spent 27+% of revenues only on trade promotions. They should start to put a detailed plan. Questions could go:


  • How to increase sales?
  • How to attract customers?
  • How to decrease the spending?


The answer is one. Trade promotion optimization. Start by suggesting a promotional plan for the year including the best products, strategies, and prices. Move then to the trade promotion management, where your promotional plan would be managed throughout the year, also feeding data to the planning system. In the central planning system, a supply plan is created. A supply plan, or an inventory plan, means a when, what, where, and how much how to hold. A logistic plan depends on the transportation of products from manufacturing places to warehouses. Then, a production plan is placed where producing the products is based upon a sales plan. Lastly comes the purchase plan which is the procurement plan for the finished product.


How can TPO help in sales using technologies?


Trade promotion optimization automates sales using technologies like data entry and post-event analysis. Without automation, teams need to manually fill in the data, which would make them prone to error and unproductivity.


What Is The Role Of Analytics In trade promotion optimization?


With analytics and predictive analytics, brands could predict the results and outcomes of many promotional plans, exploring the "what if" and "what else" in them, analyzing with better perspective, and creating better opportunities.