POI Pulse Guest Column
Trade Revenue Management Challenges in CPG
Organizations Today
There are various headwinds which are forcing manufacturers to sharpen their ability to understand every penny that is being spent with retailers. Not just above the net sales line, but below the line where retailers are starting to make demands. Those headwinds include:
Retailer Consolidation
The Declining Center Store
Deep Discounter Growth
Acceleration of On-LineCPG companies are facing challenges that the y have never faced before and the solutions will require a broader set of Trade Revenue Management capabilities than have ever before.
Deep Discounter Growth
Acceleration of On-LineCPG companies are facing challenges that the y have never faced before and the solutions will require a broader set of Trade Revenue Management capabilities than have ever before.
Survey & White Paper.
Exceedra and TPG fielded a survey which reviewed the capabilities and practices that we believe should be in place at CPG organizations to effectively address the main headwinds faced. We then reviewed several of the more challenging areas within the survey and provided solutions and guidance in a white paper released at the beginning of the year. Given the industry pressures, these core practices expand beyond classic trade investment to include other areas. For example, eCommerce may not be a large part of the business for companies in core CPG categories, but the effort to service this business and the impact on trade strategy and P&L’s, is already being felt. The survey consisted of 17 questions & respondents were asked to rate their company’s performance.
The questions covered were as follows:
Q1 Brand and promoted group pricing guidelines
Q2 Volume, net sales targets and
trade rate budgets
Q3 Customer Segmentation/
Prioritization
Q4 Shopper Marketing
Q5 Incremental funding
Q6 eCommerce planning
Q7 Effective Customer Terms Mandate Negotiation
Q8 Controlling distribution related mandates, fines and fees
Q9 Settling customer claims
Q10 Product, customer and sales
hierarchy data
Q11 Trade Systems
Q12 Everyday Price
Q13 Post Event Analysis
Q14 Trade Systems pre and post
analysis
Q15 Customer Promotional Practices
Q16 Trade Investment KPIs
Q17 Upper management understands
Q1 Brand and promoted group pricing guidelines
Q2 Volume, net sales targets and
trade rate budgets
Q3 Customer Segmentation/
Prioritization
Q4 Shopper Marketing
Q5 Incremental funding
Q6 eCommerce planning
Q7 Effective Customer Terms Mandate Negotiation
Q8 Controlling distribution related mandates, fines and fees
Q9 Settling customer claims
Q10 Product, customer and sales
hierarchy data
Q11 Trade Systems
Q12 Everyday Price
Q13 Post Event Analysis
Q14 Trade Systems pre and post
analysis
Q15 Customer Promotional Practices
Q16 Trade Investment KPIs
Q17 Upper management understands
Trade Systems pre and post analysis
(Q14): “Systems are efficient and effective at helping us evaluate our trade investment, pre and post event.
(Q14): “Systems are efficient and effective at helping us evaluate our trade investment, pre and post event.
” 67% said their existing system & process, or lack of system, was poor. Clearly there is a need and desire to improve the process and the systems supporting it. We suggest the following areas are important to consider.
1) Make it easier to enter and keep TPM up to date. The promotion entry also needs to be accurate based on how it will be actually be executed. This can be a challenge depending on how things are captured in the system.Part of the solution is establishing rules on how to handle the entry, for instance situations like overlapping promotions.
2) Improve the ability to manage the base volume forecast. From an accuracy and ROI analysis perspective, the best practice is a statistically generated base forecast at the planned customer level. Many companies don’t have a good handle on this which can lead to after the fact manipulation to improve ROI.
3) Better transparency of EDLP spend when overlaying promotional activity.
Promotional overlays drive incremental volume that you must also pay EDLP allowances, this additional spend needs to be part of the ROI analysis.
Promotional overlays drive incremental volume that you must also pay EDLP allowances, this additional spend needs to be part of the ROI analysis.
4) Get the right data sets for the major accounts to support customer business planning – this means adding consumption data. This is an ever-evolving process that must be managed on-going.
5) Correcting the event detail after the fact can be a major challenge. From a process perspective, there needs to be a balance and realization that what is entered should align to the desired post analysis. If you short cut the entry, it takes more effort on post analysis to truly understand resulting in a gap between what was planned vs actual. Correcting the process will improve misalignment.
Read more in our Trade Revenue Management White Paper which covers numerous challenges faced and provides you with industry best practice solutions.
This is available for free download here:http://www.exceedra.com/resources/w hite-paper-trade-revenue-management/
Find out more about Exceedra:
www.exceedra.com
www.exceedra.com
sales@exceedra.com
Plan now to attend the POI Spring, European, and Canadian Event & Leadership Summits, April 3-5 2019, Chicago, IL., May 14-16, Rotterdam, NL; June 12-13, Toronto, ON respectively.
Industry News
Leading CPG’s New Digital- Savvy Marketing Strategies
Source: (Financial Times January 17, 2019)
The poster child for the new reality is HaloTop Ice Cream, which used savvy Instagram marketing and a health-conscious pitch to become the sixth-most popular ice cream brand in the US in barely three years. Unilever had to scramble to copy its low-calorie, high-protein offering, launching competing Breyers Delight only last year. Learn more
Coca-Cola: No Longer Tied to Old Brand Rules
Source: (Mktg Week January 17, 2019)
“The way we engage consumers is different, the way we do insight is different as well. For smaller explorer brands we are taking the new approach of more social listening and less of the structured research that we do with Coca-Cola; it’s trying to learn faster from the consumer,” says Javier Meza, CMO of sparkling beverages. Learn more
SAVE THE DATE! June 12-13 2019
View Updated Agenda with NEW DEEP DIVE WORKSHOPS and Reserve your spot now with over 327 CPG/Retailer Peers, Chicago, April 3-5, 2019
New Sessions & Workshops on RGM, Retail Execution, Data & Analytics! Advance Your Trade, Category, and RGM Related to Amazon and Other eCommerce and Omnichannel Retailers.
The 2018 Spring Summit was sold out!
Attendees already registered include: Nestle, L’Oreal, SC Johnson, Phillip Morris International, Cargill, Ocean Spray, Campari, Tilamook, American Tire Distributors, Hain Celestial, Keurig Dr. Pepper, The Scott’s Miracle-Gro Company, Dole Foods, General Mills, BJ’s Wholesale Kimberly Clark, PepsiCo, Hometown Foods, Red Bull, Nestle, P&G, Constellation Brands, Ferraro, J&J, Unilever, Mars, Kraft Heinz, Musco Family Olive, Kellogg, Abbott Nutrition, Bayer, Palermo Villa, Casey’s General Store, RX BAR, Ajinomoto Windsor, Land O’ Lakes, Church & Dwight, Spectrum Brands, Tyson Foods, Kellogg, Campbell’s, Herr’s, Eagle Foods, Mondelez, Ateeco/Mrs. T’s Pierogies, Pinnacle Foods, ConAgra, Walgreens, Blue Buffalo, Ainsworth Pet Nutrition, Colgate-Palmolive, Bimbo Bakeries, JM Smucker, Coca-Cola, Wells Dairy, Furlani’s Food, Massimo Zanetti Beverages USA, Barilla, Morton Salt, Mill Fleet Farm, MillerCoors, Smithfield Foods, Johnsonville, Ecos Brands, and many others. Register here
POI Members should request their complimentary passes now! Reach jhampto@p-o-i.org
General Mills Campaign Targets GenX
Source:(Mktg Dive January 16, 2019)
As consumer-packaged foods marketers remain focused on connecting with the coveted millennial generation, they often overlook Gen X, who has more purchasing power and displays more brand loyalty than other age groups. Gen X is also more responsive to loyalty programs, enjoy engaging with brands on Facebook and are value- and price-driven. Learn more
Join Revenue Management Share Group for Manufacturers – Sharing Information & Best Practices; Facilitated by the Promotion Optimization Institute andCMS Consulting (Ken Sullivan). Provides members with a forum to discuss and share best practices, industry trends, emerging challenges and capabilities, as well as other relevant topics of interest to senior executives.
Topics Include: Revenue management analytics, EDLP vs High/Low, Channel strategy, Pack strategy, Product mix, Promotion Optimization, Sourcing and procurement, Value incentive curves, Execution and sell-in considerations, Strategic and tactical roadmaps, Cross-functional collaboration, Team structure and roles and more! Next meeting: April 2019 More Information and Join Here
250+ Will Achieve Growth at POI European Summit
Delegates already registered include:
P&G, JAB, Unilever, Fererro, Jumbo, Perfetti Van Melle, SCJ, MolsonCoors, Lactalis, Dr. Oetker, Orangina, L’Oreal, JAB, SCJ, Danone, JDE, Pladis, Beiersdorf, Arla Foods, Finlandia Cheese, Kellogg, Perfetti Van Melle, PepsiCo, Diageo, Ferarra, Delta Cafes, Heineken, Essity, Mars, Unilever, Coca-Cola, Dr. Oetker, Fererro, Mondelez, J&J, FrieslandCampina, SCA, AB Inbev, Wells Enterprises, Pernod Ricard, Lavazza, Kimberly Clark, Red Bull, Henkel, LEGO, General Mills, Hovis, SAB Miller, Lactalis, Carlsberg, Campari, and many more.
Unilever, P&G and Nestle Expand Subscriber Biz
Source: (Reuters January 18, 2019)
Selling directly lets manufacturers skirt retailers, giving them more profit and control over pricing, promotions and merchandising. This helps when retailers such as Amazon and Sainsbury’s are pressing consumer product companies for discounts and pouring resources into own-label products. Subscription selling gives them guaranteed revenues, a better picture of customers and can make goods cheaper to deliver. Learn more
Source: (DigiDay January 14, 2019)
“We can’t predict which platform is going to be the biggest in voice nor can we say if the hardware market will stay so fragmented around the different ecosystems, so we will play to the strengths of each one,” said Lickfett, Diageo’s head of digital innovation. “We find that with Amazon, with its intuitive integration into its marketplace, there’s a clearer commerce opportunity there, whereas with the Google [voice product,] there’s a broader entry point where you can literally ask it anything.” Learn more
The presentations from the recently concluded POI Fall
Annual Summit in Dallas, TX are available to POI Members here
Presentations from the Recently Concluded POI Retail Execution Summit are available to POI Members
Rob May, Director, Edgewell – “The 2018 POI Fall Annual Summit was the best summit yet. Great content, high energy, collaborative and educational. I will be sending others to future POI Summits so they can benefit as much as I have. Good combination of research/ theoretical and experience/practical.”
Kroger and Walmart Outline Digital Transformations
Source: (Grocery Dive January 14, 2019)
Jeremy King, Walmart’s chief technology officer explained, “The goal is to give customers the digital experience they crave.” It’s no longer acceptable to have a non-digital experience when you go out there and that means we have to be integrated across the board not just in handheld devices but through customer shopping lists, pickup, and more..Technology is definitely changing retail. “ Learn more.
POI 2018 TPx Panorama Released – Announces Best in Class!
Source: (POI Pam Brown 2018)
“Consumer buying behavior and the market landscape have dramatically changed in the last few years, which is further fueling a necessary but profound paradigm shift in the CPG ecosystem that calls for manufacturers and retailers to understand not only the consumer but pricing, trade deals, and digital marketing offers in today’s retail marketplace,” said Pam Brown, Chief Commercial Officer of the POI. Learn more, and access the report here
P & G’s Focus on Performance Marketing
Source: (DigiDay January 17, 2019)
P&G’s performance marketing, an approach common among DTC brands in which campaigns are oriented around driving product sales instead of brand awareness. The move is part of its ongoing effort to eliminate waste in its ad spending and coincides with the marketer bringing more of its marketing in house. P&G has brought media planning. Learn more
Sparkling Ice Refreshes Brand with Voice Apps
Source: (Mobile Marketer January 15, 2019)
Sparkling Ice’s apps for Amazon Alexa and Google Assistant, the two most popular digital assistants on smart speakers, can help to reach customers while they’re in their kitchen or living room and need their hands free to concoct drinks while listening to verbal directions. Learn more
Leave a Reply