Marketing and Promotional Investments form the second biggest component after ‘cost of the goods sold’ in a consumer goods manufacturer’s P&L. Companies spend significantly on price promotions, promotional displays, coupons etc. to be able to gain their market share. However, it is no secret that many CPG companies lose money on several promotions in their quest to generate additional sales volumes. Many are unable to differentiate between ‘good’ (positive ROI) versus ‘bad’ (negative ROI) promotions. For those that can effectively do that, the value proposition is enormous. A 15% improvement in trade promotion effectiveness can result in up to 30% improvement in operating profit (assuming a trade Investment of 20% of sales and margin of 10% of sales). For most CPG companies, it is hard to find a more significant and clear-cut financial opportunity than being more effective in customer account planning and trade promotions planning and execution.
With customer account planning, promotion planning and execution and promotional analytics being so critical in determining your company’s profitability and growth, it is natural that as a Business or IT leader in the CPG industry, you must continually be asking the following questions?
- Do our key account managers have sound account planning and promotion planning tools to effectively collaborate with trade partners?
- Do our key account managers and executives have near real time visibility into non-promoted volume, promoted volume, trade-spend and promotional P&L? Or are our planners doing ‘blind planning’?
- Am I promoting the right brands / categories / products? Have these promotions been effective?
- Do we have a complete system to manage volume, price, promotions, trade spend, funds, and claims that seamlessly integrates with our ERP order processing and financials?
- How can I leverage SAP in-memory technologies such as HANA to improve our system performance, usability, accuracy and visibility and simplify our processes?