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Department store magnate John Wanamaker famously stated, “I know that half of my advertising dollars are wasted … I just don’t know which half.” At long last, technology to forecast and measure promotions is available to brands and retailers to significantly improve the fate of their marketing dollars. But many consumer goods (CG) companies are not reaping the full benefit of today’s trade promotion systems and continue to incur waste because they use disparate business processes for promotion planning, volume planning and annual business planning.
Enhanced, integrated business processes are critical to unlock additional value and ensure more effective, productive trade spend. Yet few CG companies are currently achieving complete integration, leaving opportunity on the table. According to Gartner’s Vendor Panorama for Trade Promotion Management in Consumer Goods, August 2012, an estimated 40% of CG companies still use spreadsheets to manage trade promotions, particularly in Tier 3. But this is changing rapidly. “The biggest development is the number of new projects that have been launched since early 2012 as CG companies have realized that they need to improve their ability to execute trade promotions independent of changes in the economy,” according to the Gartner report.
The success of early adopters is a big reason. In Aberdeen Research’s Top Five Reasons to Transform Trade Promotion Strategies, September 2012, companies with an upgraded TPM strategy saw 80% better gross margin and 121% better revenue uplift from their promotions.