It makes perfect sense that retailers and manufacturers expect results from their significant investments in trade spending and discounts on brands for in-store promotions.
The relevant question is if money is spent on trade promotions, how long are you waiting to see the results or impact of those investments?
Did sales increase from trade spending in Q3 within your firm? Did trade spending for specific packages or brands hurt sales for other corporate brands or SKUs in the same category?
If you are compelled to wait for a report to show up on your desk at the end of Q3 for answers to these simple but highly important spending questions, then your real problem may not be just trade spending but the failure to make sure the needed information is rapidly visible to managers who are responsible for these spending decisions.
With rapid visibility, managers can see results from trade decisions and change as needed by volatile market conditions. This is the essence of business intelligence.
Competitive dynamics over the past 5-10 years have forced most manufacturers to spend increasingly large sums of money for promotions and discounts and yet this dramatic increase in spending is still being done while manufacturers, distributors, and retailers are blind to the results of these investments.
So, what is the formula for success in optimizing the trade and promotions investment?
A key factor usually begins by adopting a technology platform that goes well beyond just dressed up reporting.
The goal of effective trade spending is enabling the right people to harness all the data needed in seconds, not days, to gain the critical insights into all trade activity.
The right technology platform will deliver measurable results of each promotion, the ability to change if the results dictate, a clear understanding of which products being promoted are yielding increases in sales and margins, and which activities created negative results.
The right technology platform will have all the queries, formatting, and data sourced so that nothing is lacking for managers to interact with all trade plans, see predefined dashboards to save time, and the ability to drill down in seconds to evaluate all decisions.
With this data visualization, front-line managers can respond to seasonality trends, competitive dynamics, and change directions rapidly based on market realities not hoped for forecasting.
The right technology platform alone will frequently not yield the desired outcomes within the organization. Trade spending can no longer be viewed as a “cost of doing business” when it remains one of the largest line items on the P&L.
Spending enormous trade & promotion dollars and labeling it as a cost of business usually highlights an internal perspective by management of not fully understanding the retail game as it is being played today, relying on the “this is how we have always done it” mentality.
Or they may understand it but still lack the ability to see what is going on. Either excuse is no longer acceptable if competitive strength is to be preserved.
To remain competitive, trade spending must be a daily part of the strategic business planning process. Where trade spend commitments can be tracked, outcomes can be examined by account, by brand, and by SKU.
With this capability fully integrated into the technology framework of the organization and the management team, enabled with the right data. Then, promotion spending becomes a truly continuous improvement process and the goal of business intelligence becomes achievable.