Trade Promotion Planning: Don’t Just Copy Last Year’s Events

One of the bestselling features of Trade Promotion Management (TPM) software is the ability to copy and paste events from prior years to your new plan. But don’t do it, it’s a trap! Simply copying what you did last year is almost guaranteed to generate less sales and incur greater costs this year than the same event did last year. I purposely made the title of this article boring, but in case someone who is not familiar with the consumer goods industry accidentally clicked on this article, here is a quick definition of terms. Trade Promotion Management (TPM) is the planning and execution of promotional events to encourage shoppers to buy certain brands or items. Trade promotion events that temporarily lower the retail price work because, well… “who doesn’t love a good deal?”. The most common type of trade promotion is a temporary price reduction or TPR. Discounts can get shoppers to try a different brand, and if the deal is good enough it might even go viral and people will go out of their way to “stock up” and buy all they can. In addition to price discounts trade promotions can include in-store displays, on-line and paper coupons, rebates, and sampling among other tactics.

Copying the event details into your new plan has its appeal because it is easy and requires less typing than having to re-enter data like the description of the promotion and the dates the discount will be available, expected sales lift, etc. In years past, copying events could lead to increased sales and better ROI if only the “good” events were copied and the ones that did not work were left behind.

But copying events is more often a trap that leads to lower sales, higher costs and even lower sales for the overall category. The way people shop has changed so much in the last few years that what worked last year is almost guaranteed to be old news when planning this year. Shoppers have more ways to buy the same product today than they have had in the past. They can jump from channel to channel in search of new and more pleasurable shopping experiences often while sitting on the couch. The quest for speed and convenience is now a more important consideration for some shoppers than price. Manufacturers may be giving unnecessary discounts in one channel while spending too little on improving the overall shopping experience in another if they just copy prior year events.  

The shopper that responded well to an offer last year may have moved on and may no longer be there to even see this year’s offer. Even if the same shopper is still there, the aisle or online page may be so cluttered with competing offers that nothing stands out. Or even worse, the person who was going to buy a product regardless of the promotion now just pays a lower price without ever realizing they were getting a deal.

But there is a better way! The first step to avoid copying previous events is to “zero base” all trade promotion spending. Zero basing is a kind of terrifying term that refers to canceling all previous year activity and starting completely over from scratch to determine how best to invest your trade dollars to achieve your objectives. Those experiencing zero basing for the first time are afraid it means there will be zero funds available to invest. Zero basing simply provides a starting point, with hopefully a realistic amount of money to invest, to make good trade promotion decisions that reflect the reality of today’s shopping experience.

One of the best ways to invest these newly freed up funds is to create amazing shopper experiences. Shoppers are looking for good deals, convenience and want to be associated with brands and products that are doing good for others and the environment. The challenge is that there are many different types of shoppers and even an individual shopper can be in very different mood states (e.g. relaxing with friends, rushed, or the kind of rushed that is an emergency when there is no more dog food and the dog is barking). That means that an amazing shopper experience for one may be a terrible way to buy for another.

Here too is more good news as technology has evolved and offers shoppers more choice and manufacturers and retailers can customize the promotion and often overall shopping experience to an individual.  Promotions in the old world (just a year or two ago) had to be sent out in mass with very little thought to which specific shopper groups received the offer. Tailoring offers to an individual’s shopping preference means the offer will more likely to lead to a purchase without wasting time and money sending offers to people who would not value them.  

Value begins with “not copying last year’s events” and this was Article #1 of 4 outlining ways to leverage TPM to create more value. Up next, Article #2 of 4 offers a look at how to plan trade promotions for sufficiency while delighting key stakeholders. The next article, Article #3 of 4, discusses the importance of creating amazing events and finally Article #4 of 4 is all about matching the right offer to the shoppers who value them most.

Let me know what you think and whether you are interesting reading the next article by giving this a “Like” or Comment.

Originally published on LinkedIn in Feb 2020; https://www.linkedin.com/feed/update/urn:li:ugcPost:6630877305923268609/

‍