HOW TO ENHANCE PROMOTION MANAGEMENT?
Optimise Trade Spend and Ensure Profitability
It is common when entering supermarkets to see the main aisle arranged with full displays or boxes and giant colourful posters inviting the consumer to buy one product and get one free or to benefit from a discount on another product.
Promotion spending represents nearly 25% of a brand’s revenue, whereas roughly 60% of promotions fail to break even (1), and only 20% would lead to an increased sales income. Knowing this, the massive embracing of selling under promotions sounds a bit surprising.
Even if laws in some countries aim at controlling promotions volume, or some brands turn to an Every Day Low Price strategy, promotions seem inescapable to some brands. Indeed, they mean taking or sustaining market share, being placed on the shelves before or in place of the competition, recruiting new consumers, making the existing ones more loyal, and boosting sales either casually or by making them stable at least.
Companies’ sales growth is the target, but profitability and return make them sustainable over time. When promotions support sales, efficient promotion management processes mitigate costs and, in most cases, ensure profitability.
(1) Source: Nielsen
KEY PERFORMANCE INDICATORS (KPI)
ANNUAL SALES GROWTH
What challenges do companies face when dealing with promotion management?
Brands struggle to define promotions effectively: selecting the right products to promote, appropriate promotions mechanics, financial mechanisms, estimating the halo effect, and ensuring gains in terms of revenue, margin and return on investment (ROI) – all these simultaneously.
Therefore, when building a promotion plan and calculating a budget, they often duplicate the current plan, adjust dates and offers, apply growth and decrease rates. Promotions are later fine-tuned progressively to fit the retailers’ requirements.
Covid-19 impact on promotion management
Black swan events cannot be predicted. Who could have foreseen the spread of Covid-19 and its global impact on the economy? How can the frenetic consumption that was seen for some products be predicted while other sales dropped significantly?
Whatever their usual forecast accuracy, few companies have been able to anticipate the effects on their sales since the beginning of the crisis. The winners were better prepared. They successfully combined resilient processes, insights capture and responsive technology.
Download this full Best Practices white paper and discover
the 5 Key Pillars of enhancing a promotion management journey!
In this white paper, you will also learn:
- Who’s concerned by enhancing promotion management?
- Why is it crucial to enhance promotion management? What are the Benefits?
- How to monitor trade spending and ensure promotion profitability? The journey towards enhanced promotion management – The 5 Key Pillars
- How FuturMaster can help you to optimise your promotion management process?