Trade Promotion Management Case Study

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White Paper TRADE PROMOTION MANAGEMENT October, 2015 Table of Contents Abstract: Trade Promotion Management 1 1. Trade Promotions in CPG Industry 1 2. Trade Promotion Process 2 2.1 Inputs needed before designing Trade Promotions:- 3 3. A Step Ahead- KPI’s affecting TPM 3 4. Trade Promotion Challenges 4 5. Forward Looking Approach for TPM 5 6. How will your use case bring value to IGATE business/vertical 5 7. References 5 8. About the Authors 5 Abstract: Trade Promotion Management Trade promotion management is defined as the process of planning, budgeting, presenting and executing incentive programs which occur between the manufacturer and the retailer to enhance sales of specific products. Trade Promotion is Marketing…show more content…
Trade Promotions in CPG Industry Trade promotions spend is significant investment for CPG players. Since 2000 Trade promotion spend has almost doubled without having resulted in correlated sales & profits. Trade Promotion constitutes one of the largest investments in CPG manufacturers P&L accounting for 13-20% of revenue & around 60-70% of Marketing investment. According to Industry estimates $300 Billion are spent in trade & retail promotions every year. With so much stakes involved, measurement of promotion efficacy & efficiency is one of the most critical issues faced by CPG companies. Some facts which demonstrate importance of effective Trade Promotion Management-: • Studies suggest that anywhere from 25 to 70 percent of CPG suppliers' trade promotion spend is ineffective. • Study by Booz & Company on Trade Promotion efficacy suggest that difference between 2 ends of Promotion efficacy- best & worst ranges between 100% to 500% • 2015 Gartner benchmarking study found that discounts and promotions represented upwards of 25 percent of revenue for a typical consumer goods manufacturer, which equates to hundreds of billions of dollars across U.S. CPG Figure 1: POI & Accenture Trade Promotion Optimisation…show more content…
Some of the important factors ignored here are- o Category Type- Some Categories don’t need promotions or need less promotion inputs as compared to others o Market Share- Market share of Brand & overall Category size is also important criteria in determining budget allocation • Trade Promotion Programs are normally not revisited every year; CPG companies don’t drastically overhaul their strategies every year. This could be game changer as company’s might be missing on some of the best practices which would evolve in this fast changing world of business. • Projecting as right partner to channel partner helps CPG company evolve their Trade promotions & also pass some of the benefits to end customers. This goes a long way especially when Manufacturer is launching a new product in already cluttered retail market. • Today’s Retailers understand that focus on Trade Promotions of one brand can have issues too; It may lead to cannibalization of sales of other products, lower down margins, lead to customers extra loading of same brand which would reduce their frequency of visit in

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