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A Guide to Trade Promotion Technology: What is TPx?

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Are you experiencing challenges around trade promotion investment and results? Let’s work together to turn these challenges into opportunities. The solution is trade promotion execution. Trade promotion execution is referred to as TPx.

What is TPx?

According to the Promotion Optimization Institute (POI), TPx is inclusive of trade promotion management, trade promotion optimization, trade promotion effectiveness and analytics. For CPGs, trade promotion refers to the marketing events that are executed at the retail level.

The “x” in TPx signals the expansive actions that are required for CPG manufacturers to ensure profitable promotions, effective sales planning, and success in reference to trade spending.

 

TPx and Revenue Growth Management

TPx is becoming a subset of emerging revenue growth management (RGM) initiatives. In the 2019 POI survey, 45+% of companies will be advancing their RGM practices. 28% of these companies will be adding personnel and nearly 35% will be advancing technical resources with tools and advanced capabilities.

 

Common Trade Management Challenges

  • Nearly 76% of the companies continue to have foundational data challenges. 2019 Vendor Panorama
  • 70% agree that their companies are struggling to have retailer aligned promotions executed at the store level. 2019 Vendor Panorama
  • 81% noted that their company is struggling with how to manage modern trade. 2019 Vendor Panorama
  • Only 17% have predictive models in the hands of field users for optimizing promotions where they actually get planned. POI Focal Points
  • 90% of companies have challenges moving from transactional to analytical [trade strategy]. 2018 Vendor Panorama
  • 63% still don’t have post-event capabilities. 2018 Vendor Panorama

 

If you’re facing these paralyzing business situations, it’s important to

KnowPredictImprove

 

The need to know:

What you’re dealing with if knowledge is the challenge

1. Data quality and disparate data make accurate and timely analysis an impossible
2. Inexact syndicated baselines or manually calculated baselines and lifts
3. Limited and error-prone post-event analysis on a small number of accounts and frequency
4. Inability to quantify ROI of promotions or customer plans
5. Lack of visibility to competitor promotions or complementary consumer marketing activity

 

The need to predict:

What you’re dealing with if you can’t predict promotional outcomes

1. Inadequate application of performance data to event and customer plans
2. Inability to account for anticipated market or distribution changes during planning
3. Cumbersome and non-repeatable processes to achieve “what-if” event and customer scenarios
4. Poor visibility to manufacturer and/or retailer predictive KPIs
5. Lack of easy access to plan vs budget metrics and comparisons

 

The need to improve:

What you’re dealing with if performance improvement is paralyzingOpportunity

1. Limited automation of data flows, data cleansing, lift calculations and application, and other manual-intensive processes
2. Lack of constraint-based modeling to identify the optimal promotional event or mix
4. Inability to apply machine learning to optimize ROI or other objectives of promotional activity
5. Failure to institute and automate guardrails aligned to trade investment and growth strategy


 

As more and more organizations prioritize data-driven spending, adopting a revenue growth management (RGM) mindset is imperative to successfully addressing trade investment challenges.

In the 2019 POI survey reported:

  • 45+% of companies will be advancing their RGM practices
  • 28% of these companies will be adding personnel
  • Nearly 35% will be advancing technical resources with tools and advanced capabilities

The RGM team’s own enterprise short-term and long-term pricing road maps, own retailer trade allocation and balance the trade funding needs across channels and accounts. Proper allocation, planning, and monitoring of trade spend is critical.

Solutions for Trade Challenges

First, identify your biggest trade challenges. Agreeing on a solution is where many organizations get stuck. There’s a lot of confusion about the trade promotion technology options that will help achieve definite trade objectives.

To address your key trade challenges – an analytical trade promotion management and optimization solution – is the foundation for trade promotion excellence.

However, it’s paramount for your long-term success that there is a clear understanding of what TPx solutions do and what they can automate. You’ll want to implement the best practices for your organization.

 

Define TPM and TPO

To start, let’s address the unique functionalities of trade promotion management (TPM) and trade promotion optimization (TPO) solutions.

In fact, many mistake these solutions as the same, when in reality they complement each other.

TPM provides tactical management for trade promotions and TPO provides a strategic analytical approach to trade investments.

Trade Promotion Management (TPM) – A TPM software application is best used to manage the execution of trade events and finances. In this way, it can help manage the transactional activity of an event by settling claims, clearing deductions and creating accruals. It will also facilitate limited post-event analysis using a comparison from planned spending and volume vs actual.

Trade Promotion Optimization (TPO) – A TPO solution is an analytics and predictive planning tool used to perform comprehensive post-event analysis that includes baseline visualizations, quantifiable KPIs and brings together POS, shipment and spending data to measure the ROI of a promotion. Furthermore, the inclusion of predictive and prescriptive analytics creates a future planning capability for testing event scenarios and calendar building. True optimization occurs by applying constraint-based modeling to define the criteria and then letting the solution run through various possibilities to determine an optimal event or promotional mix.

 

What Functionality Should I Look for in a TPO Solution?

You should find a trade promotion optimization solution that creates value for your whole organization. Brand managers, sales, pricing managers, and the promotional approval team will all benefit from trade system implementation.

Blacksmith’s Director of Presales explains, “In my past, both working for a CPG manufacturer and working with CPGs on the software side, I can tell you that TPO can and should touch as many departments as possible.”

Look for TPO Software With These 3 Components

1) Data Cleansing and Harmonization

• Automated harmonization of POS, Shipment and Spending Data
• Elimination of error-prone spreadsheets

2) Accurate, Real-Time Post-Event Analytics

• Accurate baseline calculation and visualization
• Automated calculation of event and plan ROI, KPIs, and lift coefficients
• Planned vs Actual metrics
• Data-anomaly correction
• Competitive and consumer marketing impact

3) Predictive and Optimized Planning

• What-if scenario predictive event and customer planning utilizing constraint based modeling
• Calculation of manufacturer and retailer KPIs during the planning process
• Annual optimized customer planning including plan comparison, optimal promotional mix, and plan vs budget capabilities

 

Without all three of these system components, CPGs might gain insight but can’t turn it into action. Or worse yet, lack the accuracy and holistic view of promotions performance making any predictive planning nothing more than a misinformed guess.

 

The Lasting Value of Trade Promotion Execution

In the chase for elusive profitability, we have over complicated trade promotion strategies with situation-specific spreadsheets, manual intensive processes, costly software customizations, and ongoing consultative relationships.

The result may be incremental progress (if we’re lucky) but more often, companies never see measurable results from these initiatives and abandon difficult-to-sustain practices in favor of doing what they did the year before with the same, or even worse, results.

Because trade promotion spending will remain a significant investment for CPG companies, innovation is key.

 

 

Build Your Innovation on These 4 Key Principles

 

  • Simplicity – Make the complex, simple. Easy to implement. Easy to use. Easy to adjust.

 

  • Sustainability – Evolve with the company and industry. Address today’s challenges with an eye toward tomorrow.

 

  • Repeatability – Trade in the mundane and manual in favor of integrated systems, automated intelligence and predictable outcomes.

 

  • Measurability – Know what you did, how it worked, what you could do differently, and what would be the results in real-time.

 

Auto-pay Screenshot Blacksmith TPM

TPM and TPO software share data bidirectionally.

This eliminates much of your redundant entry and poor data management.

Your teams can move beyond key challenges and focus on using your TPO solution’s capabilities to drive better business results.

Putting the integration and product enhancement responsibility on your solution partner infuses industry best practices with your organization’s current processes to collectively and regularly improve. CPGs: Focus on the seamless integration between your TPM and TPO solutions!

This integration is known as TPx.

Your trade solutions environment must make the creation of events and plans, the calculation of historical and predictive KPIs, and the reporting of planned and executed performance easy for your teams to access, execute and share.

While the process should be simple, the outcomes should be powerful enough to make an impact.

Ask yourself:

• Is the data accurate?
• Can you compare multiple events or plans?
• Are you able to show your retail partner the advantages of shifting promotional strategy?
• Do you have the intelligence to build a better revenue growth management strategy for your business?
• Can you easily optimize an event or plan within constraints to align with the revenue, profit or volume objectives of the organization and your retail partners?

Combining simple usability with powerful insight and predictability results in a proven path to overcoming stagnant trade promotion management practices.

Don’t struggle making your trade investment the revenue growth contributor it needs to be.

The industry is moving toward trade promotion execution – to understand and simplify processes while delivering meaningful returns.

…Only then can you innovate beyond transactional trade promotion management to be more competitive, more intelligent, more agile and ultimately more profitable.

 

Synergize TPM and TPO capabilities to creates a single trade promotion environment.

You should have the tools to achieve measurable and sustainable success. »» Let’s talk!