Trade promotions, over a period of time, have become an integral part of any consumer goods company. It is one of the effective marketing tools on a company’s utility belt, primarily due to the proliferation of brands and increased competition.
Trade promotion management and optimization is a big challenge faced by all consumer-packaged goods (CPG) companies due to the complexity of tasks involved in the trade promotion lifecycle. To combat this challenge, technology solution providers developed software-based solutions for trade promotion management. As a result, we now have several players in this software market having their own set of tailored offerings for different business requirements. These players offer a range of services including tracking trade spend, promotion ROI and discovering insights from pre- and post-promotion analysis by leveraging data from multiple sources (ERP, POS data, syndicated data from analyst firms and others).
However, what about the road ahead? In today’s internet world, the consumer’s decision journey has significantly changed, making it even more difficult for CPG companies to understand consumer behavior.
Also, due to emergence of several trade promotion management solution providers in the market, it’s becoming more challenging for the consumer goods manufacturers to zero down on a single supplier – especially when all technology marketers promise to deliver valuable, actionable insights. With these challenges in mind, below are three key considerations for businesses to ensure they are on the path to better trade promotion management.
Adapt to Multi-Channel Retail
According to the U.S. Department of Commerce, just 11.2% of U.S. CPG sales occur via e-commerce – meaning the vast majority of these sales still take place in brick and mortar stores.1 Trade Promotion shortcomings, such as promoting too often, discounting too deep or nor promoting the right product, all present opportunities for improvement. Price interactions with the growing online channel also presents a unique challenge and requires a different lens to improve promotion performance.
Until now, almost all the trade promotion management solution providers were focusing exclusively on traditional retail. But, the emergence of e-commerce marketplaces and direct-to-consumer channels, have changed the retail landscape significantly by generating abundance of data across all consumer touch points.
Marketers need better technology to remain in sync with this speed of change. The situation demands more sophisticated tools and algorithms that can leverage data not only from conventional data sources (ERP, POS data, syndicated data from analysts and others) but also from digital touch points like social media, e-commerce channels, clickstream data and more.
To capitalize on upcoming retail opportunities, businesses must make changes to their trade promotion management processes and systems that can withstand the test of time over the next decade. To win over the next-generation consumer and boost trade spend ROI in this digital era, it is crucial to adapt to this changing retail landscape.
Only when the trade promotion management systems are modernized and capable of understanding this evolving consumer behavior will CPG manufacturers be able to deliver the right promotion at the right time.
Remember the Human Element
With more players in the market offering trade promotion management solutions, inquiring businesses may struggle to narrow their searches down to the right partner. In this homogenous landscape, evaluating people behind the solutions ensures that the cream of the crop comes out on top.
Organizations seem to be ignoring this for now and rather have focused solely on building robust software solutions and infusing all kind of capabilities into it. But to differentiate from the rest, technology marketers need to focus on the people behind the creation of algorithms and their capability to generate actionable insights.
The human element and its many forms – experience, creativity, ingenuity – can help any company level up from one that merely collects data to one that effectively deploys it.
Make Technology Work For You
CPG companies track trade promotion data from various systems with no single integrated view. Some data is also semi-structured, such as promotional calendars. Advances in Data Science and AI are helping overcome these challenges.
Data science techniques can track promotions in real time and accurately forecast them into the future. This helps account managers choose right promotions and course correct in real time. Data science is transforming account-planning processes from laborious and erroneous to automated and accurate.
Simplicity of design, ease of use and visualization of data are the key requirements of a trade promotion management system. Business intelligence tools can create visual stories about which promotion worked and how, while design thinking can enable natural interactions with the user that lead to unique insights. Both are irreplaceable and essential to business success.
With the accurate insights in hand courtesy of advanced recording techniques, managers can optimize their resources and take more fruitful routes to promote their products.
Abiding by these three tactics alone does not make a successful trade promotion management program. But on the road to optimizing processes, a modernized, automated trade promotion solution – that doesn’t forget about the critical human element – is as good a place as any to start.