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Trade Promotion Management for CPG companies Raúl Alejandre García Industry Expert Consumer Products

Trade Promotion Management_Industry presentation

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Thought Leadership Trade Promotion Process Presentation delivered by R. Alejandre.

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Page 1: Trade Promotion Management_Industry presentation

Trade Promotion Management for CPG companies

Raúl Alejandre GarcíaIndustry Expert Consumer Products

Page 2: Trade Promotion Management_Industry presentation

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

Page 3: Trade Promotion Management_Industry presentation

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

Page 4: Trade Promotion Management_Industry presentation

Are you maximizing return on promotion investments and optimizing customer profitability?

Page 5: Trade Promotion Management_Industry presentation

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

Page 6: Trade Promotion Management_Industry presentation

“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

Page 7: Trade Promotion Management_Industry presentation

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

Page 8: Trade Promotion Management_Industry presentation

• 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

Page 9: Trade Promotion Management_Industry presentation

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

Page 10: Trade Promotion Management_Industry presentation

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

Page 11: Trade Promotion Management_Industry presentation

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

Page 12: Trade Promotion Management_Industry presentation

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

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Fun

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iew

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Dec

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l Reg

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and

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Page 13: Trade Promotion Management_Industry presentation

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

Page 14: Trade Promotion Management_Industry presentation

One Single Number !!!

Collaboration

Financial Goals

Trade Promotion

Management

Marketing Initiatives

Supply ChainDemand Planning

BI Reports

Page 15: Trade Promotion Management_Industry presentation

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

Page 16: Trade Promotion Management_Industry presentation

Gracias!Raúl Alejandre GarcíaIndustry Expert Consumer Products [email protected]://www.linkedin.com/in/mxraleja