Trade Promotion Management FAQ
What is Trade Promotion Management?
Trade Promotion Management or TPM is the management of the entire life cycle of trade promotions and related spending between Consumer Packaged Goods (CPG) manufacturers and retailers. The lifecycle spans from promotion planning all the way through post-analysis and settlement.
Why is TPM an important software category for CPG?
In short, trade promotions are expensive and difficult to track and measure. For most CPG manufacturers, trade spending represents the #2 line item on their P&L, often 10-30% of gross sales. This cost impacts every part of the organization from sales, marketing, manufacturing, finance, operations and supply chain. However, using manual process manufacturers have difficulty measuring spend performance, determining promotion profitability, and reconciling deductions from retailers and distributors.
Why do I need software to solve this problem?
Many companies don’t track their trade dollars or use inadequate tools. 59% of CPG companies still use desktop spreadsheets as the primary to track promotion data. Without a single system of record for promotions, companies lack visibility up and down the organization or between department, often resulting in frequent surprises and fire drills.
Why a TPM (Trade Promotion Management) Solution?
TPM creates a single, centralized system of record for trade promotions and related spending. This gives common access to all departments, supplying them with consistent, accurate and current information to help make better business decisions.
- Sales managers can spend their time selling product, not compiling spreadsheets and reports.
- Corporate finance can immediately access the most up-to-date financial information about trade spending, enabling them to easily analyze the company’s current liability for trade.
- Administrators can easily reconcile and clear deductions, without wasting time assembling backup documentation and chasing down sales people.
- Manufacturing gets a clear understanding of upcoming promotional activities to help make better informed decisions about production and distribution.
What is SaaS TPM?
Software-as-a-Service, or SaaS, is the hosted delivery of software, meaning that customers subscribe to the solution and access it over the Internet rather than buying and installing a piece of software. SaaS is much more cost effective in that it reduces IT burdens, implementation times, and eliminates manual upgrades. TPM delivered as SaaS greatly reduces cost, risk, and implementation times.
What should I look for in a TPM solution?
Statistics show that software complexity and user adoption remain key challenges to TPM implementations. Many vendors sell expensive overly-complex applications that make a TPM investment difficult to justify or implement. At MEI, we believe customer success is most important, so we have designed our SaaS application to optimize ease of use, reduce IT complexity, and maximize time to value.
I’ve heard a lot about TPO recently. Is that different from TPM?
In a word, yes. You can think of TPM as the heavy lifting involved with the day to day operations of planning, forecasting, executing, and reconciling promotions. Trade Promotion Optimization, or TPO, would complement TPM in that it uses advanced modeling and predictive analytics to suggest optimized objectives, tactics, or pricing. A good foundation of promotional data from a solid TPM system is a prerequisite to TPO.
