For many consumer goods companies, trade promotions are the second-largest item on the P&L after cost of goods sold, yet few know what they get back for that spend. Plans are often built in home-grown spreadsheets by taking last year's plan and tweaking it, so promotions fail to deliver the ROI they should. Digitalising and optimising this process involves two different kinds of software:
- Trade Promotion Management (TPM) replaces spreadsheets and automates the transactional workflow of planning, funding, budgeting, reconciling and monitoring promotions.
- Trade Promotion Optimisation (TPO) adds advanced analytics, such as price elasticity and cannibalisation modelling, to explore what-if scenarios and optimise promotional programs against constraints like trading terms and market share objectives.
For companies wanting to replace the home-grown spreadsheets and automate the labour-intensive processes for data loading and handling, customer planning and budgeting, TPM is usually the starting point. Complexica's Trade Promotion Management (TPM) system can be used by a broad range of users – such as merchandisers, category teams, trade marketing, strategy and customer finance – for their transactional workflows associated with planning, managing (funding, budgeting and reconciling promotions) and monitoring promotional activities.
Complexica's Trade Promotion Optimisation (TPO) system, on the other hand, can enable advanced analytics around price elasticity and cannibalisation, as well as optimisation and what-if predictive modelling capabilities. TPO allows users to explore countless what-if scenarios, as well as run optimisation algorithms against various objectives and constraints, such as trading terms constraints, market share objectives, promotional guardrails, supplier constraints, category growth objectives, and more. The table below distinguishes between the two types of functionalities:
For companies wishing to replace the home-grown spreadsheets and automate the labour-intensive processes for data loading and handling, customer planning and budgeting, TPM is usually the starting point. For businesses wishing to strategically manage their trade investments and use what-if scenarios to find optimised promotions, TPO offers an additional level of sophistication. Depending on business requirements, TPM and TPO components can be deployed together or in isolation. Key benefits include:
- Reduced time and labour required for creating new promotional plans
- Improved ROI on trade spend
- Better outcomes across the supplier-retailer value chain, as well as overall category
- Data-driven decisions and negotiations, leading to improved supplier-retailer relationships
