A Deeper Look into Trade Promotion Management (TPM) in the CPG Industry

A comprehensive guide to understanding the TPM process. Learn how to optimize trade spend processes and boost account management to a new level.



What is trade promotion management in the CPG industry?

Trade promotions are crucial to the success of a business, especially for the CPG (Consumer Packaged Goods) industry. Not only do promotions help increase sales to meet your revenue goals, but they can also boost your market share by attracting new customers.

While standard promotion practices include discounts, bundles, rebates, sales contests, and display fixtures, consumer preferences are changing. This means that promotions that worked in the past might not make the cut anymore. 

That’s where, Trade Promotion Management (TPM) comes in, where teams can gauge the impact of a promotion campaign and optimize trade spend practices. This makes it possible for you to quickly set up, manage, and evaluate your promotion plans, so you can nimbly react to environmental changes and be fully equipped for the future.

Below we’ll walk you through a few simple must-haves to implement in a trade promotion management process. 

Trade promotion management must-haves

The truth is, if your team is tied to spreadsheets and disjointed data, you’re lacking the single source of truth you need to accurately plan and track your current and future promotions. Especially in today’s economy. 

This means your sales team is likely glued to their desks- forecasting, re-forecasting, answering questions, and justifying promotional spending- when they should be focusing on selling. Worse, you might end up quickly increasing your trade spend budget without an eye to what is efficient.

That’s why more organizations are turning away from traditional offline spreadsheet planning and are now managing promotion activities with TPM tools. TPM tools should act as the 'Operating System' for your sales team. They should give your organization the structure, automation, control, and insights you need to make decisions in real-time

The right Trade Promotion Management (TPM) tool should be able to perform the following:

1. Account planning and budgeting

Ensure capabilities include single and multi-promotion cloning and annual plan cloning with an intuitive UI. If your company utilizes contracts and rebates, you’ll want to be able to manage them on the same calendar as your promotions. 

2. Consumption and shipment forecasting

Your account planning should have both promotional and non-promotional volume capabilities for a complete consumption plan, where you can easily lag and modify to account for shipment timing. Make sure your vendor has the capability to model baselines and uplift factors - these are essential to accurate forecasts and true ROI calculations.

3. Deduction management

The trade promotion management tool you choose should make it easier for your organization to reduce deduction aging and improve validation rates. Also, look for a solution that incorporates auto-settlements functionality to help your AR team improve productivity.  

4. The ability to grow with you

Along with all of the features above, your TPM solution should have the option for you to add on advanced TPO and RGM capabilities as your organizational needs and readiness requires. This will help you make the right decisions at the right time and allow you to integrate all of your data in one place. Ultimately, this will give you the buy-in you need across your organization.   

Your trade promotion management (TPM) software should be your secret weapon

Surprisingly, many CPG companies still rely on Excel to manage and make decisions for promotions. When it comes to sales planning and trade spending, this strategy falls short because the data isn’t updated in real-time, and can be impossible to make sense of it when it’s spread out between multiple documents. 

That’s why trade promotion management tools work to connect all aspects of your promotion planning and connect every stakeholder, from retail, distribution, finance, and budgeting. 

The right TPM tool should be designed for your specific needs, with ease of use in mind. This means giving you the tools you need to optimize trade spend processes and catapult account management to a whole new level. This means it should be easy to manage, and set up, and easy for your team to evaluate your promotion plans across all levels of your product and account hierarchies. 

You may also be interested in How Slimfast Boosted His TPM With CPG.

The future of trade promotion management (TPM) tools 

In the last few years, TPM tools have undergone tremendous change. They have grown to be more sophisticated and have increased in variety. It’s important to note that not all tools are created equal. The future of trade promotion management tools should be business-led and not just another one-size-fits-all solution. 

It all comes down to tracking your return on investment (ROI), quickly and regularly. With the right TPM tool, you should be able to nimbly react to shifting pressures in today’s economy, like inflation and supply chain shortages. 

With all the strides made so far, TPM still has some shortcomings. A survey conducted by the Path to Purchase Institute revealed that more than two-thirds of consumer goods businesses consider it vital in their operations. However, they are still dissatisfied with the current management systems, program performance, and overall value. There is a need for deeper insights, better metrics, and quick response capabilities.

That’s why artificial intelligence and machine learning are the future of trade promotion management. Machine learning is the driving force behind using historical data to make accurate predictions for future promotions. It falls under the umbrella of artificial intelligence (AI), which uses predictive patterns to help you enhance the functions of your promotions, like automating forecasting of inventory needs and optimizing the supply chain. 

Both technologies can ultimately help you improve timing, tracking, and other areas of investment. The result is a greater ability for your team to accurately allocate funds to improve your ROI, and quickly react to today’s changing economy. 

Reimagine your trade spend management- all in one place

The right trade promotion management tool integrates the necessary, often disparate data sets, so your entire team has ready-to-use trade promotion intelligence at their fingertips to optimize your revenue growth. 

CPGvision’s AI and ML models are packaged into a user-friendly, transparent UI. This enables your team to interact and impact the end result and demystifies the black box of most data models. Contact CPG Vision to learn more.

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