Trade promotion spending averages 15%- 20% of net trade sales at most CPG manufacturers and is the second largest expense item on the P&L. Yet, in many companies, effective and efficient management of this expense, and maximizing ROI, has proven elusive and is still a top three strategic priority.
Trade overspending hurts the P&L, large deduction balances and unauthorized deductions cloud the balance sheet, the optimum level and allocation of trade spending to channels and customers is an open strategic question, and numerous trade studies show that nearly three quarters of all trade promotions produce no incremental lift. On top of this, sales organizations in many companies are spending a disproportionately high percentage of their time managing cumbersome and inefficient processes.
Our Experience
We have considerable experience in the design of promotion management processes and implementation of ROI improvement initiatives. Every one of our clients has turned trade promotion spending from a weakness into strength.
Our team of experts has worked with numerous clients on:
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Assessing their trade promotion strategies, management processes and overall effectiveness.
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Developing the strategic role of trade promotion and its interdependence with other marketing programs.
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Designing the process and systems requirements for effective trade spending planning, management and financial controls.
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Selecting, implementing and training on decision support tools for post event analysis and predictive modeling to understand and optimize the ROI of trade spending.
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Determining the organization effectiveness requirements in terms of resources, skills and training.
Our Approach
The WWA Trade Spending Management Model is a comprehensive strategy and process model that starts with an assessment of current trade spending strategies, processes and practices. We then build the strategic approach for trade spending, design the planning and management processes, guide the selection and development of decision support tools and finally determine the organization effectiveness requirements.
During the assessment phase we examine trade spending allocation methods and criteria, promotion planning systems, customer offer guidelines, promotion management processes, integration of trade promotion into volume forecasting and usage of post event analysis and predictive modeling tools.
After the assessment, we then design the overall trade promotion strategy for the company and for the individual brands. We assess the importance of trade spending as a key volume driver in relation to other marketing drivers and then develop brand specific trade promotion strategies, guidelines and best practices in terms of preferred vehicles, level of price reduction and optimum timing and frequency. We then determine the most optimal, equitable and legal methodology for allocating trade funds based on volume share, profit contribution and opportunity for growth.
Planning and Management Processes
Developing tight management and financial controls requires integrated systems, sound processes and spending management systems.
Our expertise in banded process mapping and design, utilizing cross functional client process teams, produces highly efficient and effective processes.
Decision Support Tools
We have experience with multiple suppliers of decision support tools for improving promotion effectiveness. We help companies evaluate approaches and options for post event analysis, predictive modeling and optimization tools. We then assist in the integration of these tools into planning systems. Our involvement includes training designed to optimize the new tools.
Organization Effectiveness Requirements
We assist companies in determining organization structure, resources and those skills required to support all aspects of trade promotion management. We often participate in selecting candidates for newly created positions and often design and deliver promotion planning and management training.
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