Sales Plan Sufficiency and the Role of Trade Promotion

Failing to deliver a sales plan is disappointing enough, but all too often the plan as originally conceived was not sufficient to meet stakeholder expectations. Take for example a sales team’s plan for a large Retailer. The plan projects 2% growth, but when combined with all other customer plans the sum fails to meet the overall manufacturer’s financial objectives. Similarly, if the retailer is growing 5%, and the vendor is only planning to grow 2%, the plan can be said to be “insufficient”. It is critical to consider a wide range of key stakeholder expectations when planning.

Sufficiency at the beginning of the year allows for some uncertainty as to what is exactly needed to deliver that year’s sales objectives (thank goodness for Sales creativity and perseverance). At some point during the year the most viable option left for closing gaps to the plan might be deep discounting of the product to induce sales. This tactic of last resort can result in shoppers buying more than they need; a short-term gain often followed by softness of sales for weeks or months after the promotion as the excess is consumed. A poorly thought out volume driving promotion causes a vicious cycle where spikes in sales are planned and repeated year over year.

Stakeholder expectations are easily expressed as financial goals, but a well thought out trade promotion plan considers other factors besides promotion lift and ROI. A Retailer may ask that trade be deployed in such as way as to drive traffic to stores or online. Brand Marketing may want trade to improve the shopping experience to build consumer loyalty. If trade promotion strategy incorporates customer and other stakeholder priorities, there is a better chance of working together as a team and creating synergies.

One question comes to mind. Are Trade Promotion Management (TPM) applications implemented or even designed to support the “big bets” that manufacturers and their retailers care about most? Brian Kaplan of Eversight commented on a recent article that, “Copy and paste creates a "sea of sameness" - promotions lose effectiveness as shoppers come to expect these offers and develop buying behaviors to support those expectations.” Creating an event in TPM can be just as limiting as “copy & paste” unless there is the ability to layer on additional shopper experiences and/or the ability to send robust demand signals. Too often a trade promotion launches, and one piece of the puzzle is missing. The event may have generated great shopper interest, but if incremental product is not in-store or a new item is not yet available on-line, there will be no incremental sales.

In today’s rapidly evolving digital world, TPM solutions need to pair up with digital marketing and supply chain platforms used by manufacturers, retailers and other partners so that events are presented in a meaningful way to the shopper. Meaningful shopper experience requires precision timing, tailored content and the opportunity to buy. For many manufacturers and retailers this digital capability is quickly evolving and it is important that TPM capabilities keep up.

Whether planning to shoot for the moon or just enough to “make your number” success is judged relative to the expectations of stakeholders. Influencing shopper behavior via trade promotion is still viable for delivering sales goals, but for events to really work they must be meaningful to the shopper and well coordinated. Hint… this will be the topic of the next article. Thanks for reading article #2 of 4!

Originally posted on LinkedIn in Feb 2020; https://www.linkedin.com/feed/update/urn:li:ugcPost:6634228268562202624/