The Truth About Trade Promotion Optimization Key Takeaways:

  • Trade promotion optimization software is predictive, and the process is data-driven
  • True post-event analysis compares shipment and spending with syndicated performance data
  • A majority of CPGs are not currently using automation for promotion optimization

Webinar Hosts 🎙️

Shelley Fow, Director of Pre-Sales, Blacksmith Applications
Put a meeting on Shelley’s calendar >

Annette Gabele, Vice President of Consulting & Revenue Management, Blacksmith Applications


Trade Promotion Optimization Essentials

(video time: 2:45)

Trade promotion management and trade promotion optimization are not the same. Trade promotion management, or TPM, is tactical. Trade promotion optimization, or TPO, is predictive.

The dictionary defines predictive as relating to or having the effect of predicting an event or result. That’s exactly what TPO does. TPO provides CPGs with the ability to predict how trade promotion events will perform and removes the guesswork. TPO takes promotional planning to the next level by harmonizing data, modeling baselines, optimizing planning through predictive analytics, and applying post-event analysis. TPO software works great as a standalone solution, or it can be an enhancement to your TPM software. Together, TPM and TPO optimize and manage day-to-day trade promotion activities.


  • Data Harmonization: Centralize your internal data (shipment, spending) and external data (syndicated, POS)


  • Baseline Modeling: Smooth your baselines for accuracy, reflect the true consumption in the absence of a promotion


  • Optimize Planning: Use predictive planning to optimize your promotions at an individual event and a full calendar level


  • Post-Event Analysis: Evaluate your ROI and competitor actions


(video time: 6:20)


Is your organization optimizing promotions with a trade promotion optimization solution?

89% of CPG respondents are not using a software solution for trade promotion optimization. Only 11% of CPG respondents are using a software solution to conduct trade promotion optimization.

And while TPO is exciting functionality, it’s still a newer concept.

Are you using TPO software

Is your organization using a software solution to conduct trade promotion optimization?


TPO Activities and System Capabilities

  • Use scientific volume calculations vs. “gut feel” volume estimates
  • Apply historic lift coefficients by tactic type, price, discount levels
  • Provide credible base volume forecast
  • Utilize what-if scenario modeling capabilities
  • Require syndicated data and promotional data points
  • Integrate with your TPM system and potentially your demand planning system

(video time: 9:30)

Benefits of Investing in Trade Promotion Optimization Software

🚀 Actionable KPIs to measure and analyze = make better decisions and improve performance

🚀 Ability to conduct in-depth post-event analysis

🚀 Better understanding of consumer response to promotions

🚀 Cross-functional visibility and awareness through reporting

🚀 Increase ROI on trade investments

🚀 Enhance “tactical” TPM with “predictive” capabilities

🚀 Stronger relationships with retailers

🚀 Ensure effective promotional strategies


Optimization Deep Dive

Optimization shines in its ability to provide a data driven approach to minimize spending and increase your ROI on trade investments.

(video time: 10:45)


Consumers and Promotions

Retailers and CPGs run promotions to influence shoppers to purchase one product over another, or to shop at one store over another. Heavy deal shoppers represent 15% of total shoppers but account for 30% of total sales. Consumers look for deals; most consumers (84%) use 2+ deal tactics regularly.

🗯 Think about it, when was the last time you purchased your favorite 2-liter of soda when it wasn’t on sale? The industry has trained us to look (and expect!) promotions.

What type of data is required for standard trade promotion optimization?

  • Syndicated data (Nielsen, IRI, SPINS)
  • Retailer POS (Walmart, Kroger)
  • Numerator
  • Shipment data

To provide fully optimized capabilities, your TPO system must take in syndicated or retailer POS data at specific levels (RMA, SKU) and broke out in weekly sales buckets. This specific level of information is used to build predictive and historical lift tables that provide modeling capabilities in the system. It’s important to not supply this data for your products, but for your entire category. How your competitor promotes can play a major factor in the effectiveness of your promotions. We see more syndicated and retailer POS data combined with information supplied through Numerator, which provides even more data about your specific promotional tactics like featured ads. Last but not least, you need the ability to map your internal shipment and sales data to the specific level of syndicated or retailer POS data. That can be complicated, so make sure whatever TPO system you look at has those capabilities.

What syndicated/retailer data does your organization receive?

👉 69% IRI / SPINS

👉 62% Retailer POS

👉 60% Nielsen

👉 28% Numerator

👉 5% None

(video time: 14:35)


Syndicated data

Most CPGs are receiving retailer POS data (62%).


Historical and Future Baselines

Baselines… a CPG topic that always generates buzz.

What is base volume? Base volume is the volume purchased in the absence of a promotion. It’s the base of consumers who buy a product when it’s not a deal, when it’s regular retail price. Baselines are important for CPGs because they provide the best understanding of the underlying health and trends of your brands. Baselines are often a mystery because syndicated baselines are misleading, there’s data anomalies – like COVID, and unrecognized seasonality factors.

TPO solutions should allow you to model future baselines. Future planning periods should account for certain change drivers like changes to regular retail price and increases or decreases to distribution. Learn how Blacksmith TPO users Solaris Paper and Welch’s use accurate baselines to drive growth.

(video time: 20:30)

Optimized Sales Plans 

According to our poll, 44% of CPGs start annual retail planning from October – December. About 30% of CPGs start retail planning between July and September, while 20% plan from April to June. Less than 5% of respondents start annual retail plans in Q1.

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True what-if scenario planning is a key component to optimization. What-if scenario planning…

…ensures that your scenarios are based on statistical models that utilize consumption data – not shipments

…determines how merchandising conditions like feature and display factor in and understands that constraint-based modeling assists in building optimized strategies

…plans optimized events that compare consumption volume based on the tactics for each event

After you’ve pulled all your what-if scenarios, it’s time to put together your annual plan. Your annual plan should encompass the full year view of volume and spending – not just promotional activity. It’s critical that CPGs have a view of EDLP and non-promotional volume throughout the year.

➪ Can you compare your budget or quota to the forecasted plan?

➪ Can higher management easily get a picture of multiple retailer plans rolled up to a total – or an all account / all product total across the entire company?

➪ How quickly can you take all the events you’re considering implementing and optimize them to a full year plan?

➪ Should you allow for gap weeks after you execute?

This can be an overwhelming process if you’re answering these questions manually. Shelley recalls when she worked for a CPG manufacturer that all the sales folks filled out their annual plans on a different tab by retailer in a huge spreadsheet. Then, one person was responsible for summing up all of the information. It was a nightmare! People didn’t enter the right information on the right tab, things were accidentally deleted, some formulas didn’t add up… the list goes on and on.

(video time: 27:00)

How does your organization pull together annual plans?

72% Spreadsheets 😵

21% Software planning solution 👏

5% Napkins & scratch paper 🛑

2% Notepad ⚠️

annual planning solution

72% of CPGs are using spreadsheets and manual processes for annual plans.


Post-Event Analysis

Every CPG that spends money on promotions should conduct post-event analysis (PEA). This is a must! True PEA gives you the ability to utilize multiple sources of data in one view. That means syndicated data, internal shipments and spending, competitive activities, marketing/consumer events can be viewed at once. The ability to easily identify how your event performed against how you forecasted is incredibly valuable.

With PEA, you can:

  • Analyze event performance versus original forecast
  • Evaluate ROI and incremental profit
  • Build a roadmap on how to navigate future promotional activities

(video time: 32:30)


Greater Understanding of Promotion Performance

There are ways to dig even deeper when it comes to optimization! With tools from TABS Analytics, a division of Blacksmith Applications, CPGs can gain even more visibility into their promotional effectiveness.


Promo Scorecard

For visualization purposes, a scorecard is a great tool to help CPGs understand what promotions created incremental revenue. This scorecard is built off your baselines.

Always ask TPO vendors to explain their baseline process and how it’s captured.

📊 Capturing baselines is critical for you to see what is incremental.

📊 Did you generate what you expected?

📊 Were this year’s promotions as effective as last year’s?

(video time: 36:10)


Weekly Analysis

Look at your data beyond the aggregate level. Digging into the weekly level performance allows CPGs to summarize their different ads and to understand which promotions performed positively.

📊 Which promotions delivered the best results?

📊 When one size or segment is promoted, does it cannibalize others?

📊 When one brand is promoted, does it cannibalize others?

(video time: 38:15)


Beyond Promotion Analysis

You have so many data sources… you have more data than what you need for just trade promotion analysis. Now, take a step back and analyze your category data. One option you should look for is an optimization vendor that can provide the ability to look beyond promotional analysis and look at category or market analysis. With that, CPGs can quickly understand why velocity is up or down, review how the brand performed against competition. All of your data can sit in the same place.

Use your data to get to the why ➞

  • Understand how both new and existing products contribute to total sales
  • Identify distribution gaps at the retailer level
  • Evaluate which products build your best brand offering by promoting productive items and discounting the low performers

(video time: 48:30)