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Thought Leadership Trade Promotion Process Presentation delivered by R. Alejandre.
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Trade Promotion Management for CPG companies
Raúl Alejandre GarcíaIndustry Expert Consumer Products
General Market Requirement - Industry trends are driving change in Sales
New shopper behavior – frugal, resourceful, and value conscious
Standards to manage globally, agility to execute locally
Price / value supported by consumer take-away
Globalization
Shopper experience: Value, service, offer & atmosphere
Retailers ‘simplifying’ brand offerings; increasing private label
Transform retailer requirements into competitive advantage
Dynamic consumers
Demanding Retailers
Grow global brand equity; support local product variations
Quality products delivered with convenience & value
Demonstrate social conscience, safety & sustainability
Sustainability
Challenging Global Economy
Diverse Market Requirements
New Competitive Imperatives
Addressed Business Needs – Industry Data Confirm Account & Trade Promotion Management Challenges
Source: Consumer Goods Technology, June 2010
CP Companies Must:
Identify promotions most likely to achieve target revenue, volume and profit objectives
CP Companies Must:
Model objectives, constraints and historical transactions to enable fact-based projections of revenue, volume and profit
Are you maximizing return on promotion investments and optimizing customer profitability?
Account and Trade Promotion Management is an essential part of sales
PackagingSuppliers
DistributionCenter
IngredientSuppliers
RetailCustomers Consumers
Sales Marketing
R&D Supply Chain
IT HRFinance
Distributer
“Consumer Insights and the Ability to Respond Fast”
Consumer Products Strategic FrameworkExecuting the strategy for CPG companies
Sustainability
Marketing & Consumer Insights
Consumer-Driven
Best People and Talent
Responsive Supply
Networks
Customer & Channel
Excellence
Product & Service
Leadership
Financial Excellence
Strategic IT
1) Build the base, standardize, harmonize & integrate
2) Enable core & collaborative business processes
4) Grow consumer intimacy
3) Maximize ability to respond
These are the challenges we hear from customers
• Ineffective Planning – Promotions out of synch with supply leading to out of stocks
• Poor coordination - sales promotions not aligned with consumer marketing
• Flawed execution - pricing errors, invalid deductions, promotion cost inaccuracy, overspends
• Absent analysis – inability to measure promotion effectiveness
PackagingSuppliers
DistributionCenter
IngredientSuppliers
RetailCustomers Consumers
Sales Marketing
R&D Supply Chain
IT HRFinance
Distributer
• Integrating demand planning to improve forecast accuracy and product availability
• Promotion planning coordinates sales processes, trade promotions, marketing campaigns and sales execution
• Company-wide information enables Account Executives to act as General Managers
• Comprehensive analytics provide key measurements and analytics
The Goal: Integrate, Coordinate and enablement with the right Process and Solution.
PackagingSuppliers
DistributionCenter
IngredientSuppliers
RetailCustomers Consumers
Sales Marketing
R&D Supply Chain
IT HRFinance
Distributer
Inventory turns
Time to market
Incremental trade spend ratio
On-time and in-full delivery
Cost of goods sold
Promotion effectiveness
Percentage of revenue from innovation
Net margin
What does RUN BETTER mean for progressive CPG companies about this process
Sub-set KPIs – not complete
Coordinated, integrated systems and processes enable the Consumer Driven Enterprise
Establish a supply network that is responsive to dynamic demand
Leveraging business intelligence across the network
Faster time to market with successful products that consumers want
Tailored programs and campaigns for Consumers and Shoppers
Deliver differentiated offerings and optimize trade spending
Marketing
Sales
Finance
Supply Chain
Account & Trade Promotion Management connects processes across departments to maximize program spend effectiveness at both the brand and customer levels
Demand & Supply
Planning
Demand & Supply
Planning
Demand & Supply
Planning
Account Trade Budget
Planning
Trade Budget Planning & Allocation
Account Funds
Management
Pricing & Promotion Guidelines
Marketing Campaign Planning
Global Brand Plan
Global Brand Plan
Trade Funds Management
Promotion Execution
Account & Promotion Planning
Strategic Objective Planning
Strategic Objective Planning
Contracts & Promotion Templates
Promotion OptimizationPromotion
Strategy PlanningAccount Management
Promotion Pre-
Assessment
Volume & Profitability Modeling
Promotion Optimization
Marketing
Sales
Finance
Supply Chain
Account & Trade Promotion Management connects processes across departments to maximize program spend effectiveness at both the brand and customer levels
Trade Promotion EffectivenessSettlements &
Claims
Customer Profitability
Analysis
Claims & Deduction
ManagementP
rom
otio
n A
naly
tics
Fun
ds A
naly
tics
Tota
l cu
stom
er v
iew
Pos
t-P
rom
otio
n S
ale
s an
d V
olum
e D
ecom
pos
ition
Dec
omp
ose
of A
ctua
l Reg
ular
and
P
rom
oted
Sal
es
and
Vol
ume
Tota
l Cus
tom
er a
nd C
ate
gor
y Im
pact
A
naly
sis
Account and trade promotion management performance
KPI Industry Benchmark Improvement Potential
Percent of total sales volume sold on promotion
Deductions as percentage of sales
Percent promotion effectiveness (meets promotion goals-volume, profit), the finance function
15%
75%
25%
25% 60%
40%
0.5% 5.0%
2.7%
0% 60%
20%
Source: SAP Internal Value Engineering
One Single Number !!!
Collaboration
Financial Goals
Trade Promotion
Management
Marketing Initiatives
Supply ChainDemand Planning
BI Reports
Sales Performance Develop optimal plan balancing/optimizing across
volume, revenue, and profit objectives Upscale sales force by utilizing easy-to-use predictive
capabilities Improve promotion forecast and plan accuracy
Effective Trade Spending Optimize promotion performance Fully leverage available budget Meet manufacturer and retailer objectives
Collaboration Transition fact-based promotion planning with retailers
from post-event to pre-event Demonstrate joint value/profitability with channel partner
Business Value
Gracias!Raúl Alejandre GarcíaIndustry Expert Consumer Products [email protected]://www.linkedin.com/in/mxraleja