Strategic Post-Event Analysis
Many consumer goods (CG) companies have already invested in trade management technology, but often fail to close the loop with post-event analysis (PEA) and, therefore, never have the opportunity to elevate the discussion to a strategic level with retail customers. This month, CGT talks with Glenn Carlson, director CPG Solutions of Saama, to address how to build the right PEA foundation for a competitive advantage.
When calculating the ROI for an executed account promotion, performing PEA, does it need to be absolutely precise?
CARLSON: In a word, Yes! Regardless of the pre-event analysis that was performed, the PEA is critical. Timing issues arise when the details of a promotion are being examined and then aggregated to understand event ROI or other metrics. Spending is not limited to just one aspect of the trade dollars extended to the retailer. The proper harmonization of data from the ERP system, syndicated data source and TPM application is fundamental to achieving the fidelity necessary to accurately assess an event after execution. This undertaking is not necessarily complicated but it is cumbersome. Additionally, volume and spending forecasts associated with the event are also likely to differ from the actual figures. All of this leads to the fact that PEA is the only way to determine if an event achieved any level of success. This drives better decision making for sales, and empowers brand marketers to make decisions based on promotional opportunities that cross retailers, geographies and classes of trade.
Can sales become more strategic with retailer trade spending?
CARLSON:The key to driving strategic investments with a retailer is to elevate the discussion beyond the analysis of individual promotions. This requires providing insights more than those associated with the incremental or promoted volume of the promoted product groups (PPGs). Developing a strategy, and the subsequent execution plan, for a retailer necessitates PEA to be conducted across all the promotion plans for each and every selling category. Since events are rarely ever presented to a retailer outside of the context of a plan, comprehensive analysis needs to be conducted. The right PEA allows for insights into key financial metrics at the PPG, Brand and Plan level; beyond the individual promotion. These metrics help sales understand not only where trade dollars are being invested to drive volume, profit and market share but, help them present those details to the retailer so as to explain why trade spending might be shifting.
How do CG companies gain a competitive advantage in presenting and selling the promotional plan to the retailer?
CARLSON: Once you step outside presenting the plan solely from the brand point-of-view and include measures that are meaningful to the retailer, the relationship moves to a win-win situation. The biggest value-add to retailers is the ability to determine a promotional plan’s impact based on category metrics and facts. Retailers know that promotions, regardless of which brand is offered to the consumer, are not completely incremental to category sales, volume and profit. Using PEA as a foundation, the next challenge is related to competitive analysis; which should start with performing the same type of analysis with assumptions made for price (case cost) and trade spending (retailer promoted margin percentages) for key competitive PPGs.This might seem daunting, however, once a systemic PEA approach for your portfolio of products is in place, the required time to include competitive promotions is not significant.
When calculating the ROI for an executed account promotion, performing PEA, does it need to be absolutely precise?
CARLSON: In a word, Yes! Regardless of the pre-event analysis that was performed, the PEA is critical. Timing issues arise when the details of a promotion are being examined and then aggregated to understand event ROI or other metrics. Spending is not limited to just one aspect of the trade dollars extended to the retailer. The proper harmonization of data from the ERP system, syndicated data source and TPM application is fundamental to achieving the fidelity necessary to accurately assess an event after execution. This undertaking is not necessarily complicated but it is cumbersome. Additionally, volume and spending forecasts associated with the event are also likely to differ from the actual figures. All of this leads to the fact that PEA is the only way to determine if an event achieved any level of success. This drives better decision making for sales, and empowers brand marketers to make decisions based on promotional opportunities that cross retailers, geographies and classes of trade.
Can sales become more strategic with retailer trade spending?
CARLSON:The key to driving strategic investments with a retailer is to elevate the discussion beyond the analysis of individual promotions. This requires providing insights more than those associated with the incremental or promoted volume of the promoted product groups (PPGs). Developing a strategy, and the subsequent execution plan, for a retailer necessitates PEA to be conducted across all the promotion plans for each and every selling category. Since events are rarely ever presented to a retailer outside of the context of a plan, comprehensive analysis needs to be conducted. The right PEA allows for insights into key financial metrics at the PPG, Brand and Plan level; beyond the individual promotion. These metrics help sales understand not only where trade dollars are being invested to drive volume, profit and market share but, help them present those details to the retailer so as to explain why trade spending might be shifting.
How do CG companies gain a competitive advantage in presenting and selling the promotional plan to the retailer?
CARLSON: Once you step outside presenting the plan solely from the brand point-of-view and include measures that are meaningful to the retailer, the relationship moves to a win-win situation. The biggest value-add to retailers is the ability to determine a promotional plan’s impact based on category metrics and facts. Retailers know that promotions, regardless of which brand is offered to the consumer, are not completely incremental to category sales, volume and profit. Using PEA as a foundation, the next challenge is related to competitive analysis; which should start with performing the same type of analysis with assumptions made for price (case cost) and trade spending (retailer promoted margin percentages) for key competitive PPGs.This might seem daunting, however, once a systemic PEA approach for your portfolio of products is in place, the required time to include competitive promotions is not significant.