Post Event Analysis

Consumer packaged goods (CPG) companies continue to invest in enhancing existing trade promotion processes and systems with the goal of improving the ROI of their trade spend. Historically, industry studies show that, on average, less than 50 percent of trade events are profitable for the manufacturer, with the industry median falling at a negative 29 percent ROI for most events.  

This generates a powerful opportunity for companies. By carefully evaluating event characteristics, and reinvesting the dollars spent on unprofitable events into better performing events, firms can raise the median ROI on events, potentially saving up to 25 percent of their trade dollars.

A robust Post Event Analytics Tracking (PEAT) system can play an instrumental role in improving trade spend ROI.  A review of current industry practices shows that CPG companies approach PEAT in a number of ways, ranging from ad hoc analysis of selected events to major investment in processes and systems that result in embedded strategic capabilities. While ad hoc analysis or other independent studies of trade events can be useful, an increasing number of CPG companies are realizing that successfully integrating PEAT capabilities into existing operations provides the opportunity to significantly improve the planning, execution and results of their trade operations.

In order to successfully embed PEAT as a strategic capability, three critical success factors should be taken into account:

Choosing the right analytics models: The first step is to focus on the underlying mathematical models that underpin the analytics engine. For example, the analytic formulas will need to address a wide variety of variables, including EDLP, EDLC, markdowns, etc. The components of trade promotions can differ radically across brands and retailers, and a robust PEAT system must be able to address these inherent complexities. Proper focus on the components of the PEAT models will directly impact the quality of the output and reduce the potential for poor quality or controversial results.

Properly integrating PEAT processes and technology: It is critical to understand the process and system implications related to building a PEAT system. Too often companies assume that selecting the right software will go a long way toward building the capability, but software is only part of the solution. PEAT capability requires a very tight integration of process and technology considerations to ensure that the PEAT capability is repeatable and sustainable. In addition, many companies underestimate the organizational change implications of a PEAT implementation. Building PEAT capabilities may require new skills on the part of the personnel, and both job roles and incentives are likely to be affected. As a result, building the capability requires comprehensive upfront planning, incorporating process and system design along with organizational considerations before starting software configuration.

Securing executive sponsorship: Building PEAT capabilities requires executive sponsorship in the form of both active ownership and involvement. The resulting output from trade analytics systems can have a major impact on a number of functions across the organization. It is critical that a senior executive team be involved from the beginning of the project through deployment and beyond to ensure that an enduring strategic capability is created. This ownership, combined with proper design and build, will ensure that the PEAT project is not only successful, but creates an enduring competitive capability that has the potential to significantly increase the financial performance of the firm’s trade investments.