Introduction
In this final post of this best-practice series on trade promotion, we’ll move from the planning phase to execution - trade promotion execution (TPE). One of the most critical aspects of TPE is margin pooling.
Introduction
In this final post of this best-practice series on trade promotion, we’ll move from the planning phase to execution - trade promotion execution (TPE). One of the most critical aspects of TPE is margin pooling.
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Introduction
In our last post, we discussed theoretical best practices, and how to leverage the kind of promotion types that give you the most bang for your buck. Today, we’ll be talking TPP, trade promotion planning. These are the steps in generating an optimization model for your promotions going forward.
EDLP and It's Effect on Sales - An Example
We've written on several occasions about the problems with EDLP pricing as a trade promotion tactic. In fact, this is highlighted in a recent blog post where we noted that doing fewer, deeper trade promotion events is always preferable to running frequent, moderate promotions (including EDLP.)
These are the results from a move to EDLP for a leading beverage brand at a leading food retailer: Base Units -15%; Incremental Units -92%.
This is not an aberration; it happened to JC Penney on a corporate scale and many others, as well.
Introduction
Now that we've collected various metrics and then measured and harmonized the data, it's time to talk about trade promotion tactics. We've outlined six of them that you should seriously consider to improve your trade promotions. We'll explain each of these in just a moment, but here's an overview of some "do's and don'ts" in the implementation stage of your trade promotions.
Introduction
Besides calculating your baseline sales properly, harmonizing your data is the second "pillar" that supports the foundation for the remainder of your trade promotion best practices.
Data harmonization isn't a fashionable topic, despite its importance in analyzing trade promotion. Everyone talks about “big data” from a software perspective. But big data doesn’t get to be very big without a mechanism for harmonizing it correctly.
In our last post on promotional spending best practices, we stressed the importance of collecting the right metrics as the core foundation of good trade promotion analysis and optimization. We stated that measuring in consumer units is the best way to keep a simple and accurate measure of what you’re selling. From this, we showed how to compute revenue, incremental factor, and your spend ratio (see definitions here).
But this is only the beginning.
When sitting down with new clients, TABS guides them through the six essential elements of managing trade promotion. Each successive step builds on the one before it, and they are all critical for managing and optimizing your trade spending.
This set of best practice information is unique in the consumer packaged goods (CPG) industry. It has come from analyzing twenty-plus years’ worth of trade promotions, over 200,000 of them in all.
When attending various industry summits, I hear a lot of presentations about trade promotion analysis. Some speakers really know their stuff; most don’t. For example, whenever I hear the phrase, “You can analyze trade promotion effectiveness using shipment data,” I know that I can freely disregard whatever comes after. You can’t. Not accurately, anyway, and not without wasting a lot of time to finally find out you are measuring something else: the degree to which your supply chain is a leaky bucket of diversion.
Editor at large for Ad Age, Jack Neff, interviewed TABS Group Founder and CEO, Dr. Kurt Jetta in a recent article regarding what data says about trade promotions. Neff explains that while many have thought for years that deals cut into a company’s bottom line, Dr. Jetta and other experts disagree.
TABS Group CEO and Founder, Dr. Kurt Jetta is featured in an article in Retail Leader, discusses the problems associated with customer-loyalty programs.
