Effective management of Trade Promotions has been the buzzword lately in the CPG industry. While organizations have increased spends on Trade Promotions, results from these promotions are not always at par, leading to low ROI or even losses in some situations. Thus, organizations have increasingly laid emphasis on incorporating Trade Promotion Management systems to help better planning of promotions and eventually increased financial KPIs.
But, is it sufficient enough to plan a promotion with no feedback loop to improve the planning process? Trade Promotions Management Tool without a Post Event Analysis (PEA), is it work half done or PEA is simply a good to have capability?
Before we analyze the above question, let us take a look at what the statistics say:
- According to Hand Promotion Management, on an average, CPG companies spend anywhere between 14-20% of their revenue on Trade Promotions.
- As per an external survey, only 20% of the companies can actually measure the effectiveness of promotions at an event to event basis.
If Trade Promotions form such an integral part of the CPG business, then why only such a small percent of companies only perform PEA?
Well, one of the major challenges that the companies face in Post Event Analysis(PEA) is that while our front-end systems are capable of capturing volumes and volumes of data, our back-end systems still rely on spreadsheets and manual intervention to process those huge volumes. This not only limits a firm’s capability to evaluate the outcomes and generate insights but also prevents them from identifying strategies that were effective and avoid those that did not fare so well.
In some cases, even if the organizations have well defined Promotion Management Systems, they might still face challenges because of the disconnection between the Promotion Management System and the POS data capturing systems like SAP. If the two systems are not integrated efficiently, one cannot attribute the incremental sale to a particular promotion, leading to yet another promotion plan which is solely based on the instincts and market knowledge of sales executives rather than facts and figures.
In present age of personalized marketing, where the target audience is an individual and not groups anymore, it is very important that CPG companies leverage equally competent and analytically advanced systems to perform Post Event Analysis. These analytical tools can not only analyze immense volumes of data but also generate insights and assist in promotion planning by predictive analysis. They can also perform what if analysis for the sales executive, to recommend on the most effective promotion plans.
Mindtree has also implemented Trade Promotions Tools for some key CPG clients. These tools are well integrated with the POS data collector systems for good data harmonization, have analytical capabilities for effective Post Event Analysis and are capable of assisting the Sales Executives in promotion planning by predictive analysis.
Meanwhile, to explore more on Trade Promotions continue reading other interesting blogs:
If you are looking for solutions for effective trade management, feel free to talk to Mindtree experts here.