Energizing Trade Promotion Optimization (TPO)
Sales and marketing managers are increasingly pressed to demonstrate a return on their trade spend investment, an expense that typically overshadows other segments of a Consumer Products (CP) company’s marketing budget. Implementing a sound Trade Promotion Optimization (TPO) strategy is the best way to demonstrate this return, assuming that a Trade Promotion Management (TPM) solution is already in place and performing successfully.
This increased pressure, along with increasing marketing outlets, evolving consumer expectations and a stormy economic climate, have caused a surge in TPO interest. Now, more than ever, CP decision makers have a window of opportunity to significantly upgrade their marketing effectiveness through TPO. While TPO is certainly not a new concept, why are we seeing an increased engagement in TPO? Advances in technology, greater availability of key retail data, and increased collaboration amongst trading partners are all driving this trend.
Now is the time to energize your TPO strategy. Not only will you influence your top and bottom line performance, but you’ll better collaborate with your retail partners, and most importantly, improve the shopper’s experience.
The Growth of Account Planning
To appreciate the urgency of the TPO imperative, it is helpful to start with planning. Manufacturers’ ongoing quest to influence shopper behavior has entrenched their habit of paying significant sums to retailers in return for promotional performance. Each year this practice is reinforced as average spending levels gradually increase.
Retailers count on this marketing investment, as evidenced by the incorporation of these dollars into their planning budgets and their performance measures. In fact, even with escalating new media alternatives outside of trade promotion, analysts predict unprecedented trade spend growth. In 2020, the percent of revenue manufacturers will spend on trade promotions is expected to approach 30 percent.
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