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1 © 2014 SAP AG or an SAP affiliate company. All rights reserved. PROMOTION OPTIMIZATION INSTITUTE | FALL SUMMIT 2015 | DALLAS TX
Revolutionizing Trade Management Timo Wagenblatt Head of CI Product Area: Sales & Marketing Focused Solutions SAP SE – Waldorf, Germany
Colby Sheridan Global Director: Sales and Trade Management Solutions SAP SE – Atlanta, GA
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Waves of Change for CP Organizations
2015 2000 1990 1980 1970 1960 1950
The Rise of the
BRAND 1950 - 1970
The Rise of
RETAIL 1970 - 2000
The Rise of the
CONSUMER 2000+
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The drive to personalization creates enormous costs
Source: Terra Technologies 2014 Forecasting Benchmark Study
-35
-25
-15
-5
5
15
25
35
2009 2010 2011 2012 2013
23%
2%
-18%
2%
-22%
30%
Growth in network complexity since 2009 Growth in %
Items Sales Sales/Item
• Research & Development : Product innovations, delivery and launch
• Sourcing : Commodities, other raw materials, and packaging
• Manufacturing : Production setup changes and capacity
• Supply chain : Forecast error, inventory, and obsolescence
• Sales & Marketing : Segmentation and channel-specific programs
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The rise of the consumer must also be considered to fully appreciate complex marketplace dynamics
Consumer
Manufacturer Retailer
Why do I need a relationship with a Retailer or Mfr?
If I promote Product A will it increase overall
basket size?
If I promote Product A will it grow my category?
Why do I need to share my
personal data?
How can I increase Shopper Loyalty?
What’s my ROI?
Who are my most valuable consumers?
How can I make sense – and leverage – exploding
consumer data?
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• Many CP companies use Excel to build account plans and promotions
• Version control issues, not integrated, duplicative / outdated data
• Annual plans are a rush to the deadline
• Customer plans are not aligned with company objectives; roll-up is difficult
• TPM systems that are implemented are often merely used as a “checkbook”
• Most or all data is internal; merging with external views is difficult, and the explosion of consumer data has created new challenges and opportunities
• Promotions are not consistently analyzed
• Repetition, repetition, repetition … with the same sub-optimal results.
The current situation for trade management has changed little in years, and leaves room for opportunity
Use this title slide only with an image
Industry Challenges
Retailers look to their CP partners for advice to
improve business
Retailers are demanding business plan tailored for
the buyer in their own languages and KPIs
Absent analysis – inability to measure profitability and effectiveness of a
customer business plan
Retailers are expecting manufacturer support to
achieve their revenue and profitability targets
Retailers expect coordinated sales
promotions and marketing campaigns to be tailored
to their shoppers
-19% average ROI on trade promotions
(Capgemini)
Public
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Product Launch Failures
Promotional (Non)Effectiveness
20% lost sales due to product out of stock (GS1)
27% loss of sales due to product wanted not available in assortment (Q&A Research & Consultancy)
75% of product launches fail… (AMR)
-‐19% average ROI on trade promoCons (Capgemini)
Not Overcoming these Barriers results in Sub-Optimal Business Decisions
82% of consumers will subsCtute and switch brands due to an out of stock product (Marke>ng Science Journal)
Price Sensitivity
52% of consumers agree that the price of a product is more important than brand names (dunnhumby)
Lost Sales
Brand Substitution
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Personalized WIN-WIN Optimize
Personalized business plan tailored for the retailer and his buyers in their own language and KPIs
Collabora9ve business planning by providing manufacturer’s and
customer’s perspec9ves
Analysis
Ability to measure profitability and effec9veness of a business plan based on internal and external data
“More bang for the bucks” by understanding how to impact volume and margin from internal and retailer perspec9ve while planning
Trade Management should enable collaborative business planning
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Collaborative business planning benefits are clear
Tangible Benefits
• Shift from manual/individual Plan build to a structured way of planning
• Integration with retailer view
• Increase collaboration during planning and target tracking with the Retailer
• Consistent success criteria measurable with the Retailer
• Allow users to retrieve, amend and analyze the right information quickly
Indirect Benefits
• Integration of past learning's
• Joint event development with retailers
• Full impact analysis with roll up P&L capability
• Increased trust
• Increased transparency and visibility of business
• Joint plan ownership responsibility / mutual goals
• Shift from data reconciliation to analysis and strategy execution
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TPM Think Plan Manage
Revolutionize Trade Promotion Management
1. Manage Overall Process to drive decisions that balance non promotional and promotional activities
2. Allow Account Managers to understand how to impact volume and margin from internal and retailer perspective while planning
3. Actively manage execution and towards overall plan and foster shift towards profitable promotions
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Detailed Promo
Planning
Post evaluation Insights Actual data
Marketing Strategy
Execution and Settlement
Integrated Business Planning (Marketing Planning, S&OP, Financial Planning, etc.) HQ Targets
Descriptive / Predictive Analytics and Reporting
Revolutionizing Trade Management with a holistic, integrated process from HQ target setting to execution
Customer Planning
Promotion Planning
Sales Planning and Budgeting
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Revolutionizing Trade Management with a holistic, integrated process from HQ target setting to execution, with wrap around optimization
Detailed Promo
Planning
Post evaluation Insights Actual data SAP Trae Promotion Optimization
Marketing Strategy
Predictive Model driven
Execution and Settlement
Statistical Forecasting and Optimization
Integrated Business Planning (Marketing Planning, S&OP, Financial Planning, etc.) HQ Targets
Descriptive / Predictive Analytics and Reporting
Customer Planning
Promotion Planning
Sales Planning and Budgeting
§ Easy enabling of sell-in & sell-out analysis to analyze forward buying by highly automated data processing with built-in exception management
§ Reduction of out-of-stock, out-of-shelf & lost sales by faster visibility into promotion execution results and leveraging harmonized 3rd party data for predictive modelling
§ Ongoing benchmarking of top/bottom selling stores, products, and promotions adapted from actuals
Increase Forecast Accuracy
Leverage Retailer Insights
Increase Incremental Revenue and Margin
§ Enhanced post-event analysis built on internal & 3rd party data
§ Detailed sales planning & budgeting based on accurate & granular demand history
Promotion Planning and Optimization
Execution and Settlement
Customer Planning and Optimization
Strategic Planning and Budgeting
§ Easier monitoring of retailer compliance for faster course-corrections and claims validation
Being able to leverage both internal and external disparate data streams enhances the overall trade management process
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Customer Business Performance cockpit
Quick search on your customer promotions
Dynamic charts to provide high level, real-time overview
on your sales target
Rich Analytics for further analysis
Easy selection of your customer business plan
Color coding alerts for deviations between targets and plans
Select the version of business plan
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+ Integration Visibility
Customer Business Planning means for your business
Having an integrated tool for customer business planning enables sales planner to plan more accurately, to identify deviations of the plan faster and to react on deviations more effectively
Combining volume, margin, assortment, promotion and financial planning in one single business application
Combining manufacturer and retailer perspectives and helps to communicate and negotiate towards customers in customer language
Helps driving price, volume and margin towards company targets
+ Shared Insights
Profitable Business
Plans
Customer Business Planning… Value for your Business
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R – Return on Investment
E – Enhanced visibility to all profitability drivers
V – Visibility due to real-time planning
O – Out-of-Stock reductions due to better planning
L – Latest estimates aligning plan with actuals
U – User experience must be beautiful (consumer-grade)
T – Total volume, both promoted and non-promoted, baseline and uplift
I – Integrated Business Planning
O – Optimization at every stage of the process
N – No more excuses!
Revolutionize Trade Management!
17 © 2014 SAP AG or an SAP affiliate company. All rights reserved.
THANK YOU! Timo Wagenblatt Head of CI Product Area: Sales & Marketing Focused Solutions [email protected]
Colby Sheridan Global Director: Sales and Trade Management Solutions [email protected]
