So, clearly, consumer goods and retail companies have their work cut out. While there are many benefits to trade promotions, there are also a lot of choices and challenges to take on, and a lot of existing promotion efforts that can certainly be improved upon. Companies can only respond to all of this with a comprehensive trade promotion management framework that will take you safely from strategy to effective execution. This framework addresses five key areas: strategy, processes, analysis, organization, and tech. So, let’s take a look…

A clear focus for your business should be your trade promotions management strategy.

First of all, you need to have a concrete understanding of what your business’s overall objectives and goals are. Only then can you set and align your medium-to-long-term promotion decisions, and your pricing strategy, in a way that actually helps you achieve what you set out to do.

But, don't forget that trade promotions are about team work - they’re a deal struck between a brand and a retailer, so your objectives and decisions will have to be aligned.

This can be more challenging than you might imagine. For example, a product manager for a consumer goods brand might seek to increase midterm sales and the brand's market share within the category. On the other hand, the marketing manager of a retailer might be more concerned with increasing the profitability of the overall category. Clearly, some productive discussions need to be had, and the best step forward would probably be to engage in ongoing, long-term, joint business planning.

Now, let’s take a look at the processes involved in trade promotion management…

Creating the strategy we’ve just been talking about is clearly one of the first steps you’re going to want to cover through objective planning and setting tactics and priorities. After that you’ve got to deal with budgeting - securing funding and allocating it across the right areas to ensure that you can actually afford to achieve the goals you’ve set out.

The next step is account planning. This includes baseline planning for the different sales channels and trade promotion types, as well as planning your timelines across the year. Even the best laid plans can often veer off track for various reasons, so it’s also best practice to formulate an action plan for “what if?” scenarios.

After strategy and planning comes execution. Make sure that while you’re busy with the day-to-day execution of promotions, you’re also constantly tracking and monitoring their performance…

Say you’re using banners and other display ads to target consumers, but, you’re aware there comes a point after which these ads are no longer particularly successful. You’ll want to monitor this tactic and reassess when your returns are diminishing so you can rethink your strategy.

The next step? Well, it’s settlement. There are a few ways a retailer can claim payment for trade promotions, and we’ll leave that between the two of you to sort out, but ultimately, you need to compare what trade promotions and KPIs were initially and mutually agreed on, with what actually happened, and take it from there. It’s also best that you implement automation into this kind of invoicing and payment process to avoid as much human error as possible, while saving both parties unnecessary time and headache. But, no system is perfect, so you’ll need to keep a close eye on what’s going on.

The final process involved in trade promotion management is post-event analysis - essentially, figuring out whether your promotions were any good or not, and what can be done to improve them next time.

Analysis is a big and important one, and it’s also next on our list of key areas to cover in the trade promotion management framework…

Many consumer goods and retail companies have attempted to run strategic programs to improve trade promotion effectiveness, often investing millions in analyzing current performance and deploying systems, with the hope of achieving major improvements. But, all the money in the world won't do you any good if you haven't identified and examined the internal and external factors that might be impacting the current program’s success.

Many companies still measure trade promotion with a strong focus on sales volume, but this won’t necessarily give you a clear enough picture of what's going on. You might want to use profitability based on return on investment - or ROI - as a key metric, but only if additional factors such as seasonality and cannibalization are taken into account too.

You should absolutely consider external factors like these in your regular trade promotion reporting. Performance analysis and optimization really isn't an area you want to be close-minded about, and it’s certainly not the place to cut corners, because it will ultimately be the difference between just okay - or even bad - trade promotion results, and brilliant results.

Strategy & Execution

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