Any architect knows that the most beautiful building in the world will have little value if the plumbing doesn’t work, or if the foundations on which it sits are shaky. In a similar way, your decision about whether trade promotion optimization (TPO) is right for your organization starts with a clear-eyed assessment about the strength of your trade data foundation.
Effective trade promotion is about more than just data – it is also about your business processes, organizational alignment and strategic vision around trade and other sales and marketing activities. But before you can think about moving the needle on your trade spend return on investment (ROI), you need a solid data foundation on which to build advanced capabilities. Given the amount of investment you spend on trade – often the second-largest expense item on the P&L statement after cost of goods sold – making this assessment will be time well spent.
Many Sources, Many Challenges
Good data is a challenge when it comes to all the diverse data sources relevant to your trade promotion activity. You have internal sales data, which may or – often – may not accurately reflect specific promotion activity at the customer/SKU level. You have third party data from syndicated, point-of-sale and other sources. You have data entry systems used by potentially hundreds of time-pressed field agents susceptible to input errors.
Given these challenges, it is perhaps not surprising that many FMCG companies still prefer to avoid a reckoning with their data foundations and opt instead to guess at the effectiveness of their trade promotion decisions. That avoidance comes at a steep price, though. Consumer goods companies are under tremendous margin pressures – reflected in the fact that they make up the worst-performing industry sector in the US stock market in 2018 to date.
If you can’t measure the value achieved by that display collateral you deployed around a baked goods promotion, or understand the profit implications of the two-for-one special on soups during cold and flu season, you are missing valuable opportunities to defend your margins from the many economic factors beyond your control. Again – getting to an advanced level of granular insight won’t happen overnight. Assessing the foundational integrity of your data processes and systems, though, is a necessary start.
Human Insight in the Data Factory
The streamlining, cleansing and integration of disparate data streams is often referred to as a “data factory.” Much of the conversation around building a better data factory focuses on automation – and indeed, the activities of data extraction, translation and warehousing can be set to the beat of algorithms specifically designed for those tasks. However, the complexity of trade data – including the vast potential for key event omissions or erroneous data input – will always require judicious human intervention. Misalignment between sales volume data and associated promotional data – for example the timing of an event or the specific products being promoted – will happen. The most advanced automation systems in the world won’t be able to identify and correct all the inaccuracies. Nor will they be able to overlay unusual external events – such as natural disasters – as an enhanced explanation for what the simple numbers are saying. Human input, at key points of interface with the system, is necessary as a reality check on the results coming out.
Walk Before You Run
Trade promotion optimization can deliver important insights that lead to visible P&L improvement. However, TPO is more than just the functionalities of a given software package: it is about processes, systems and organizational alignment between key sales and marketing decision functions. And at its most foundational level it is about the data. Ensuring that your trade promotion activities rest on a solid data foundation is a meaningful first step towards more measurable insights about their effectiveness.
Wipro Promax TPO has predictive planning capability – providing users the ability to quickly and efficiently conduct ‘what – if’ analysis to model different promotion scenarios, and review systematically generated business outcomes to determine the best combination of promotional inputs. It enables a powerful planning and analysis ecosystem that can be tailored to the needs of each business stakeholder. Our data science and professional services teams are led by experienced domain experts to help you create predictive models to give your business competitive advantage through best practices in trade promotion optimization.
For more information, visit our website http://promax.wipro.com For queries, write to us at WPAS-Promax@wipro.com