After discussing about advanced analytics tool needed for CPG companies in my previous blog, here I will emphasize on relevant practices that needs to be followed at the organizational level. These practices will only help in strengthening trade promotion dynamics prevailing in the CPG industry.
These three practices if followed strictly can help business organizations in managing their trade promotion cell effectively. The details have been depicted below:
1. Set up trade promotion analytics solutions cell
Some of the analytical outputs are very complex for business users to draw insights from, as they are more focused on running their business as opposed to reading complex outputs. Creation of a trade promotion analytics solutions cell can catalyze the usage of uplift/promotion-related insights to re-direct funds. For example, a channel manager torn between price cuts and shelf-space investment decisions for a shampoo product through 7-11 channels can call up the trade promotion analytics cell to discern past contributions and investment guidance from the trade promotions cell before operationalizing the promotional plan.
2. Collaborate to collect more in-store data points
Explore collaborative options to collect more store data points like POS scanner data and shelf-space related data points. One of the critical best practices for optimizing promotions is to intensify the information exchange and collaboration between retailers and CPG companies. Organizations like Promotion Optimization Institute are involved in creating friction-less conditions for an eco-system of retailers and CPG companies to collaborate and learn from promotions. Collaborative data from retailers’ store video (solutions like Store Eyes and MindTree Intelligent Video Surveillance Solutions) can provide crucial footfalls at a shelf/aisle level which can help CPG companies align shelf-space investment decisions better.
3. Institutionalize a structured post-harvest process for learning from trade promotions
Have a formalized ‘post-harvest’ analysis to capture learning’s from a promotion (‘what went well?’/’what could be improved?’). For example, digitally capturing promotion learning’s and making it available via an application could reduce the instances where a sub-optimal trade promotion allocation decision is made.
James Joyce, the Irish novelist was very right when he said “A man’s errors are his portals of discovery.”
Creating a trade promotion cell to methodically learn from successful and not so successful promotions using advanced analytical tools can be a game changer. The trade promotion cell can provide promotion-related insights and guidance to channel managers, category/brand managers and financial teams to help allocate their multimillion trade fund dollars wisely (instead of blindly allocating it based on gut feel or past allocation patterns). And this change could make the difference between profitable CPG firms and not so profitable CPG companies, since trade promotion is the second largest component of cost and can help reduce margin leakage.
The author would like to thank R. Geetha, Anil Kumar, Reshma Dash, Neha, Geetha and Pratibha for their valuable inputs.