Painless Promotion Scenario Planning

CPG sales plans and results can stand or fall based on the promotional calendar. But how to know what works and to take the pain out of the promotion scenario planning process?

Here are three requirements to ensure your scenario planning supports a profitable promotion:

1. Data’s role in scenario planning.

Planning is hard. Typically, annual planning requires the engagement of multiple departments and leverages historical sales benchmark data from multiple sources to create a calendar which includes sales, volume, and contribution objectives. It usually takes into account past years’ promotional performance, sales figures, costs both fixed and variable based on logistics and supply chain, and post event analysis both cross-department within the organization and from external sources. And builds in current and future events to estimate and predict future market conditions, appeal, and demand levels – for each retail partner. And it needs to be adjusted ongoing, not quarterly, or monthly.

2. Creating an effective planning process for your business.

The basic approach to scenario planning is to know your company’s core competencies. What makes your company stand out? What brands drive your bottom line? Understand the people who need to engage in the process and get them engaged so you can agree on the right choice of campaign. Know your organization’s planning strategy and what advantage you have in the marketplace that drives your business. Look at market trends and evaluate the opportunity with the best information on hand. Then you will be able to run scenarios for promotions and be able to get to a decision efficiently and expeditiously that will work for all parties involved.

3. Technology increases the effectiveness of scenario planning.

If you’re operating off Excel spreadsheets to try to manage all this, you’re making life harder for yourself. This is because if you create the promotional scenario plans in Excel, not only is mapping all the inputs less visible but once approved you need to replicate it back into whatever trade promotion management tool you’re using. This adds extra steps to the process, the cost of business of which may negatively affect promotion ROI.

Managing it can be easier. Software for scenario planning and the annual planning process allows the promotions department to evaluate trade promotions efficiently, so they don’t spend too much on achieving goals. You can create draft views and scenarios and integrate them in the annual plan without them immediately going live, giving you the ability to see how they move the needle. You can review how effective and profitable prior years’ promotions were. This helps sales teams allocate their budget and spend it with their partners to get the best results and helps build a more efficient and optimized calendar.