TPO Myth vs. Reality

Posted on May 29, 2018 by Caitlin Orosz under Industry News

What is TPO? Trade promotion optimization refers to the process of utilizing integrated goals, factoring in promotion (price, duration), supply constraints and predictive analysis to create continuously improving trade strategies and results.

We set out to answer the hot-button topic, “What does it actually take to do TPO well?”. Consumer goods companies are wrestling to find the best approach and spending too much time and money on promotions that are losing money. How can we get better? Now is the time to think expansively and define goals as you create a strategy for success.

First, let’s recap  the roadblocks you face on your path to trade promotion optimization:

  1. Forecasts are off. 67% of consumer goods companies can’t predict or forecast promotional outcomes, so they roll over programs year after year.
  2. No control over trade management. 93% think that trade management systems are too cumbersome. To avoid the hassle, CG companies focus their priorities on competing activities.
  3. Undependable data resources. 85% of these companies have issues with data quality. If you have poor data, then you can’t gain actionable business insights.

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Trade promotion management and optimization deliver value by allowing consumer goods companies to track spending and ROI, compare events, share best practices, and plan more effective programs.

Globally, more than $500 billion is spent on trade promotions every year. Much of this, however, is spent on fruitless programs… Only 33% of promotions make money! Nielsen reviewed more than 800,000 UPCs and 92 million promotion event weeks totaling $213 billion in U.S. retail sales across 75 retail banners across channels, and found that two-thirds of promotions don’t even break even.

To be successful in promotional optimization, you need to start with some fundamentals– a strong TPM foundation, an investment in optimization, and a commitment to actionable data.

Ready to learn more? Find out what Paul Wietecha (President & CEO at Blacksmith Applications) and Brian Bodendein (Principal at Deloitte Consulting) have to say. Watch the webinar TPO Myth vs Reality: What does it actually take to do TPO well?

 

 

 

Source: POInstitute