Brian’s first encounter with Trade Promotion Management was with the snack company he was working for. He remembers the CEO saying to him: “We know that half of our promotional spend is ineffective. The problem is we just don’t know which half.”
Trade Promotion Management is officially defined as the process of planning, budgeting, optimizing, presenting, executing, settling, and post event analyzing incentive programs which occur between a manufacturer and a retailer to boost revenue or increase/protect market share (or both). This is usually done through a dedicated software solution or at the very least- good old Excel.
Depending on who you ask, the national average for Trade Spend (Spend/Revenue) is around 14-20% and is the second biggest line item on most companies’ P&Ls after COGs (cost of goods sold).
So why aren’t more people utilizing a proper promotional planning process or utilizing a system that helps them maximize that huge line item on their P&L?
The problem is that it takes a lot of planning, proper documentation, data, and organization of that data for a manufacturer to get a true understanding and visibility into their return of investment and how to make their spend more effective. This is where the support of a good TPM software solution comes into play.
Join us next time when we break down the TPM Paradigm Shift.
Exceedra Byte is a new weekly vlog series where we will take complex trade topics and break them down into byte-sized pieces. Stay tuned every Thursday for new episodes.
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