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Home arrow Marketing Research News arrow Market Research Blogs arrow Study Points To Ineffective Use Of Technology For Trade Promotion Management
Study Points To Ineffective Use Of Technology For Trade Promotion Management PDF Print E-mail
Written by Anand Srinivasan   
09 Feb 2015

Trade Promotion Management refers to the use of technology by CPG and FMCG companies to manage complex trade promotion activity. This includes the use of technology to handle sales forecasting, promotion planning, budgeting, predictive modeling, activity execution and analysis of events. A new study published by AFS Technologies in partnership with CGT has exposed the sub-optimal use of present-day technology by companies.

 

For the study, the companies surveyed were classified into three tiers based on their revenues. Not surprisingly, it was found that companies in the first and second tiers where IT involvement was higher had deployed TPM more effectively than the lower tier. Here are a few other interesting takeaways from the study.

Departmental Use of TPM


Not surprisingly, sales teams had the most use for TPM applications. The survey found that 53% of the time spent on trade promotion by Sales teams were on TPM applications. However, this drastically fell for the other departments. Only 22% of the time spent by Finance teams on trade promotion were on TPM while the corresponding figure for Operations and Marketing were 13% and 8% respectively. Supply chain, which is a critical element to any trade promotion activity was barely mentioned by any of the surveyed companies.

Effectiveness of TPM

In a critical reminder of how sub-optimal the use of TPM applications has been at various companies, none of the respondents rated the effectiveness of their TPM applications as 'Excellent'. The most common answer was 'Average' by 44% while another 32% found the effectiveness 'above average'. 18% of the respondents rated TPM use below average with 6% of them rating it 'poor'.

Potential For Growth

The study also asked respondents their views on the class of trade with the highest growth opportunity. Grocery and convenience stores were rated the highest with 24% and 18% of votes respectively. Club stores and Dollar stores garnered 15% of votes each while drug stores and mass merchandisers raked in 9% each. 12% of the respondents voted Other which tentatively includes promotional campaigns like offering promotional flash drives or other customized items along with marketing campaigns at trade fairs.

Trade Fund Deployment


How do marketers fund retailers for the trade promotion campaigns? 41% of the respondents noted 'bill back' as their preferred mode while the next common methods were 'off invoice' and 'scan down' at 26% each. None of the respondents voted lump sum cash as a method they deploy. 68% of the respondents also noted that their organizations were making an effort to move towards utilizing scan/scan downs in the near future and were thus focusing on consumption versus shipments.

Metrics To Measure Success

Not surprisingly, close to 68% of the respondents used ROI as a metric to measure the success of their trade promotion campaigns. This is closely followed by profitability at 65%. Only 26% of the respondents used 'cost per incremental case' as a metric to define the success of their campaigns.
 
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