Consumer Goods Technology - October 2018 - 12

CONSUMER GOODS TECHNOLOGY

TRADE

PROMOTION
MANAGEMENT

REPORT 2018

STATE OF THE INDUSTRY

The State of Trade Promotion Management
CONSUMER G O O DS CO M PAN I ES WA N T D E E P E R I N S I G H T S , B E T T E R ME T R I C S A N D FA S T E R RE SP ONSE
TIMES FROM THEI R TPM PRO CESS ES
B Y C G T S TA F F

There may be no business function in greater need of real transformation than trade promotion management - largely because
there's no business function that comes with a higher price tag.
Yet a crucial marketing practice that commands as much as
25% of gross sales is often still hindered by outdated processes
and inefficient legacy tools - despite all the changes taking place
elsewhere in consumer goods organizations in response to the
new digital economy.
In fact, CGT's 2018 Tech Trends Report finds that only 32% of
consumer goods companies have identified TPM as a priority
for change, and only a few have made it their top priority (see
page 4).
In order to assess the current state of TPM and learn what
trade practitioners are doing - or wish they were doing - to
update and improve their own systems and processes, CGT
joined with Capgemini this fall to field a survey. The following is
an overview of results, which paint a picture of a practice moving
steadily into the digital age.

The Readiness is Not All
Acknowledging the fact that trade promotion is a critical aspect
of the consumer packaged goods business is not an issue among
respondents. More than two-thirds (69%) say their company
considers the practice "extremely important," and nearly all
(94%) ascribe some level of importance.
However, survey results overall point to dissatisfaction with
existing systems, general disapproval over program performance, and even some professed ignorance about general effectiveness, as will be discussed below. While there is widespread
understanding that trade promotion is vital, many companies
have hesitated to make necessary changes to their processes.
For instance, not a single respondent to the survey could say

that they were "completely satisfied" with the quality of performance analytics they can access on a daily basis; 63% say they
are "somewhat satisfied," while 37% express dissatisfaction.
When it comes to improving performance, respondents pointed overwhelmingly (67%) to the basic need to improve promotion planning and optimization as the single most important
area of focus. Coming in a distant second was the need to boost
program execution at retail, an achievement that has long proved
troublesome for CPGs at the mercy of store employees (Figure 1).
It might also be noteworthy - and certainly good news for
legacy TPM providers - that only 3% consider the need to replace technology solutions as the most important area to cover.
That's somewhat surprising, considering the stated level
of trade promotion optimization technology that respondent
companies have. Only 11% consider their tools to be "highly
advanced," with the ability to leverage multiple, internal and
external data sources using artificial intelligence to predict performance (Figure 3).
Another 28% believe themselves to be "advanced," with the
ability to use historical, point-of-sale and syndicated data to
deliver promotion recommendations (without the use of AI).
But that leaves 42% of companies still operating with only
"basic" capabilities, making predictions using historical data but
utilizing no other resources. And even more concerning are the
17% of companies that still aren't using a TPO tool.

All About the Data
Drilling deeper down into data and insights, respondents were
somewhat divided on what type of data is most important for
gaining insights. The most obvious source was the one most
often cited, with "accurate" historical performance results being
cited by one-third of respondents (Figure 2). Syndicated research

Survey Demographics
CGT fielded this survey during August-September by reaching out to
consumer goods professionals in its community. Only responses from
verified employees of CG companies are included in the results presented
in this report.
Respondents skewed toward large companies with more than $1 billion
in annual revenue (57%) versus small and medium sized businesses (43%)

CGT | OCTOBER 2018 | CONSUMERGOODS.COM

In terms of roles, 50% work in the sales function, 25% in marketing and
14% in IT/data science, with the remaining 11% spread across finance
and various management positions.
Sales function respondents identified as being responsible for trade
promotion/revenue management, field sales or retail execution; marketing respondents were focused on either brand or category management.

Consumer Goods Technology - October 2018

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