Plan, Spend, And Prosper: Making The Most Of Trade Promotion

Used with permission from Aberdeen Group. Aberdeen Group is the leading provider of fact-based research focused on the global technology-driven value chain. For additional information, please visit www.aberdeen.com.

Three-quarters (75%) of manufacturers and retailers report that their trade promotion plan performance is average or below standard when compared to their industry peers. As a result, Aberdeen's September 2007 study on Trade Promotion Management based on a survey pool of 255 respondents defines the capabilities, processes, and tools required for optimum assortment and timely headquarter and field trade promotion planning. Proper planning ensures that the most appropriate promotion mix is created for category profit uplift, improved forecast accuracy, and reduced trade overspend in different retail channel formats.

Best-in-Class Performance

Aberdeen used four key performance criteria to distinguish Best-in-Class companies from Industry Average and Laggard organizations. These metrics are an indicator of the process level competency for Trade Promotion Management (TPM). The Best-in-Class metrics and mean class performance are as follows:

• Average forecast accuracy – 71%
• Annual trade overspend – 20%
• Average pre and post-promotion category sales uplift – 26%
• Average pre and post-promotion gross margin uplift – 28%

Weights were assigned to the respondents based on their improvements in these metrics and an overall score was identified for each of the respondents.