Is Trade Promotion the White Elephant of CPG?

If you’re a brand on retail store shelves, there’s a high likelihood you’re running some sort of trade promotion. The sole purpose of trade promotions is to move the brand’s products off the shelf and into the shopper’s cart. It’s the primary way that brands partner up with retailers to drive more sales to consumers.

So it’s a win-win, right? Wrong. The data suggests otherwise. 

In the U.S. alone, according to Nielsen, as much as 72% of trade promotions don’t break even.* In other words, by doing what you’re currently doing (or not doing), 7 times out of 10 your promotional dollars won’t give you a positive return. In yet other words, you would have been better off NOT doing 7 out of 10 of them. The question is… which 7?

According to Wikipedia, a White Elephant is “a possession which its owner cannot dispose of and whose cost, particularly that of maintenance, is out of proportion to its usefulness.” Unfortunately, more brands are thinking about trade promotion as a White Elephant – a significant, unavoidable cost of doing business. Very significant, in fact.

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With trade promotion usually taking up the #2 spot for the highest expense item behind Cost of Goods Sold, we desperately need to do better.

That’s right – not only is trade promotion notoriously ineffective, but it’s also one of the biggest chunks of your revenue going down the drain. Getting trade promotions wrong is not just wasting money – it has a domino effect that can do more damage than good to your brand and company. By spending money on ineffective activities, you lose money on the activity AND you reduce the value of your existing customers! The most common example of this is giving a discount to a shopper who was going to buy your product anyway.

If brands are getting trade promotions wrong 72% of the time, think of the significant competitive advantage you’d have if your brand got it right.

A different approach and careful attention can transform that White Elephant into a lean, mean, profit-making machine. Rather than believing that the status quo will give you the results you need, you owe it to yourself – and your brand’s success – to make sure you’re getting everything possible out of that spend. You need to get trade promotion management (TPM) down to a science – and running efficiently and effectively.

This means fully leveraging the mix of promotional activities you can execute, including co-op advertising, displays, in-store demos, coupons, offers, merchandising, and of course, the most popular type of trade promotion activity - the temporary price reduction, or TPR.

Effective and profitable TPM also means managing perhaps the most important aspect of trade promotion - the people who are making deals with stores on your behalf. Let’s face it - humans are prone to mistakes, and they can be inconsistent negotiators without structure or process. Leaving this critical piece of the puzzle to chance will allow room for chaos in your sales function and fritter away margin points that could otherwise be used for profit and growth.

There’s too much riding on your bottom line to NOT examine and improve how you’re managing trade promotion. That’s where the TPM Blueprint comes in.

blueprint-bookIf you know you want to improve TPM, where do you even start? The Promomash TPM Blueprint is the perfect place. This is not just an e-book – it’s an in-depth guide with tools to help you understand and craft (or revamp) your trade promotions program, wherever you may be in the journey. Our team has launched countless brands, stood behind demo tables and negotiated with the very same buyers you talk to. We’ve been in your position and we’re here to help you take your trade promotion program to the next level of efficiency and effectiveness.

With the Promomash TPM Blueprint, you’ll get a step-by-step outline for how to structure, set up, and run a competent trade promotion program at your company. We even include templates and worksheets to help you figure out where your program is currently and plan where you want to take it. With the Promomash TPM Blueprint guiding you from start to finish, you’ll have a solid roadmap for success. At a minimum, you’ll have a comprehensive checklist to help you cover all the bases.

The best part? The Promomash TPM Blueprint is FREE of charge. Seriously. We want to work with as many brands as we can to elevate the industry. Let’s whip those White Elephants into shape!

To get the free Promomash TPM Blueprint, click here.

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Starlet, Promomash Brand Manager Extraordinaire