Optimizing promotional spending to ensure product availability against uncertain consumer demand
It has been a challenging time for many consumer goods companies. In some cases, product demand has been erratic. In other cases, such as consumer durables, the demand stability has suffered greatly. The result has driven a continued, if not emphasized, focus of available technology investment to ensure products are available at the retail level through more predictive trade promotions, retail execution and monitoring solutions, and demand signal monitoring capabilities.
Even companies that manufacture consumer essentials, such as food and beverages, have struggled to understand demand trend periods in the past year.
Trade Promotion Solution Adoption and Justification
With a limited budget for technology investments, consumer goods manufacturers are looking to optimize promotional spending, ensure execution and product availability at the retail level, and better predict uncertain consumer demand. This will yield quantifiable benefits in the short and long term.
Streamlining trade promotion planning and optimization facilitates the execution of promotions with retailers. Processes such as creation, capture, budgeting, settlement, and analysis can firm up product portfolios in anticipation of increases or decreases in product demand. The result is improved consumer confidence and willingness to spend. Analysis and modeling techniques (such as regression analysis, system dynamics, and linear programming) simulate promotional outcomes, such as incremental lift, total volume, return on investment, and total funds spent on consumer goods marketing and salespeople.
By leveraging the simulation and optimization capabilities provided by Oracle’s Trade Management solution, companies can simulate demand outcomes based on different scenarios for pricing, promotional types (display, ads, and secondary display), duration, timing, frequency, specific items, and product family.
Consumer goods companies should consider adding capabilities to trade promotion planning by implementing stable, server-based trade promotion management solutions or a hybrid solution between the Cloud-based application and the on-premises applications.
Consumer goods manufacturers consistently identify the ability to execute their processes more efficiently and “win at the shelf” as the top areas requiring improvement to drive competitive advantage. Factors such as the volatility of fuel costs and achieving profits from a retail store are critical. Also, the ability to direct the retail sales force toward the activities that will yield the greatest returns is vital to consumer goods organizations.
Putting It All Together
Market research studies show high business benefits from a modern trade promotion solution. Oracle’s Trade Promotion Management (TPM) solution stands to change the nature of retailer/manufacturer relationships by driving outcomes as opposed to relying on the same tired promotions year after year.
The solution can improve revenue streams and margins by establishing more effective and appropriate promotional timings and relevance to buyers at a more granular, measurable level and reduce wasted promotion funds. In this fast-changing environment, TPM can drive near-term benefits for process and technology innovation in the market and obtain greater control and oversight, whereby trade promotion revenue continues to increase as a percentage of sales.
Inspirage has extensive knowledge and expertise implementing TPM for small to mid-size businesses. Let our team help you identify and reduce spending on low-value efforts and integrate TPM technologies to support your strategic promotional decisions. As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you’re upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.
