TPM
A layperson's guide to some essential trade promotion legislation and regulations
Comprehending trade promotion rules and regulations can be difficult, but is critical for CPG firms' performance.
An emerging brand is a smaller company experiencing high growth that is gaining market share and recognition. Although there are many benefits to being an emerging brand there are also unique challenges compared to those faced by the big players in the industry.
How emerging brands contribute to and shape the industry
Emerging brands in the CPG industry are often those that create innovative products around current trends and are excellent at utilizing marketing to accelerate customer adoption. This disrupts long term players in the market segments allowing for industry wide innovation. Emerging brands are also quicker to adapt to consumer feedback and create closer relationships and brand loyalty with their audience as a result. They are often differentiated from the competition by strongly playing to specific consumer desires such as social responsibility, organic, grass-fed, vegan, gluten free etc., which allows them to sell their products at a higher price point.
Challenges that come with being an emerging brand
Some of these challenges include higher marketing spend, higher cost of production, tracking unexpected deductions, and scaling. Emerging brands also struggle with refreshing and standardizing their data as they grow. This leads to challenges with reporting, evaluating results, and accurately forecasting future sales and spend. But the challenge many emerging brands find most concerning is escalating trade spend. As emerging brands expand into mainstream retailers, they are expected to create promotions and with high growth the number of promotions increases exponentially.
The chart below shows a typical journey for emerging brands, their TPx/RGM needs and how these needs change as a company grows from Niche to Mature.
As emerging brands move into expansion mode, they may begin to discover that a fairly large percentage of their trade investment is wasted. With a rapidly changing landscape of increasing trade spend, distribution, and SKUs, companies will quickly find themselves lost in the spreadsheets. Validating trade expenses become at once vital and difficult. One emerging brand that grew from 100 million to 2 Billion dollars in 2 years estimated that they were wasting $400k per week on invalid trade deductions. At this time their growth is still high enough to accommodate this waste but as they know growth will slow they are looking to implement a TPx solution to manage their spend.
Discover the winning strategies that propel emerging brands to success in the competitive CPG industry.
Managed the right way, an emerging brand can be optimally positioned to grow exponentially and dominate its respective market segment. Along with choosing the right software solutions there are several other impactful management strategies to drive this growth. Data must be used to make decisions such as picking product assortments, shelf space, retail logistics, and financial planning. It’s also critical to build relationships with key players in the industry and illustrate how the emerging brand benefits their category strategy and growth. To assist with the overwhelming requirements, it is important for emerging brands to select software solutions wisely. When it comes to trade promotion management solutions, it is tempting to go with very small companies that understand the start-up world. However, you may find that you outgrow the software sooner than you’d like. Best to select a solution like CPGvision, that allows you to start small and grow into a solution that will serve you in the long run. We understand all phases, from startup through to maturity and can enable and configure our solution to meet your needs at each stage.
As you move forward in your journey towards a TPx solution, we recommend the following resources to assist you:
https://www.cpgvision.com/everything-you-need-to-know-before-implementing-tpm-software
Guide to TPM essentials for CPG companies
https://www.cpgvision.com/master-deduction-management-in-the-cpg-industry
https://www.cpgvision.com/blog/best-trade-promotion-software
Meet CPGvision: the best-in-class, fully connected, and integrated TPM, TPO and RGM solution suite for Consumer Packaged Goods, built on the Salesforce platform. With the most advanced functionality in the industry, CPGvision equips you with real-life problem-solving applications for TPM, TPO, and RGM.