Introduction:
Trade Promotion Optimization is a process by which brands can reduce operations costs and increase ROI on trade promotions. Reports state that 55 % of trade spending fails to create awareness among consumers of brands; hence, TPO is crucial for better trade spending allocation. A longer and better promotional strategy eventually helps to set more feasible and accurate goals.
Trade Promotion Optimization Software supports and enables the entire process. The software offers a range of predictive modelling, analytics and data harmonization capabilities.
The six key steps to optimize trade promotions are:
- · Data Integration And Harmonization
- · Promotion Effectiveness Measurement And Analysis
- · Sales Forecasting
- · Promotion Optimization
- · Publishing To TPM Solution
- · Business Adoption
Listed below are few pointers to consider in regards to trade promotion optimization:
- Presence of a Trade Promotion Management system in place doesn’t serve the purpose of Trade Promotion Optimization system.
- Adoption from any of the team is not an issue.
- Implementing TPO is cost-effective.
Now let’s come to the challenges of Trade Promotion Optimization software:
Data Availability: A lot of data needs consideration before optimizing and implementing the strategies. These data mostly includes POS data or Syndicated data from data brokers or past promotion data. One of the most prevalent challenges is siloed data. Different data categories remain at different places, syndicated data in one and social media data at some other site. Eventually, this limits the efficiency and productiveness of decision-makers as processing and analyzing data becomes a task.
Depending on spreadsheets for data consumption: Mostly decision-makers in business are still reliant on spreadsheets for data consumption. Though few users are accustomed to using Excel, these sheets’ lack of flexibility decreases decision-making speed and accuracy. The challenge increases when the amount of data to be processed increases, analyzing data takes more time. To add on manual data entry is tedious and more prone to human errors.
High reliance on IT or MIS teams: Another ubiquitous challenge that prevents teams from holding data for decision-making. Usually, teams have to depend on highly-skilled personnel’s for IT or MIS roles and data scientists to get reports or update the existing ones with the latest data. This complicated process is time-taking, and it is challenging to incorporate into a decision maker’s daily routine.
Imperfect post-promotion analysis– Due to the challenges mentioned earlier and plenty of other organization-specific problems, TPO team members cannot always powerfully measure the trade promotions effectiveness and identify why low, and high yield promotions become a challenge. Therefore resource allocation and budget cannot be done effectively.
Absence of lack of tools with powerful analytical capabilities: Most companies depend on their typical corporate systems like Trade Practice Management or Enterprise Resource Planning systems for trade spend analysis. As, trade promotion planning, measurement and optimization require efficient tools with strong analytical capabilities. A majority of existing Trade Practice Management systems lacks few aspects as they only offer effective control mechanisms.
You are not paying heed to incorrect metrics: Though there is a quick realization that profitability carries more weight than volume. The ongoing trend from field sales to marketing is still focusing on the importance of work. But as volume and profitable volume are two entirely different entities. The primary objective should be on achieving profit embedded within every department of the organization.
Conclusion:
The process involves continuous steps by improving trade promotion strategies and optimizing them based on a particular business goal. The primary objective of TPO is to maximize the value of every dollar invested in trade promotions. It is about the famous motto of “Build, Measure, Learn and Repeat”.