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CGT Straight Talk: Trade Promotion Management (TPM) Myths vs Reality

Thu, Aug 13, 2015

In this article, Flintfox dispels the long held assumption that Trade Promotion Management/Trade Promotion Optimization, Demand Planning, and Sales Planning/CRM solutions are better handled independently.

Myth:

Trade Promotion Management/Trade Promotion Optimization, Demand Planning, and Sales Planning/CRM solutions are accessed by the same sales, financial, and executive personnel but are separate business processes that should be analysed individually for optimal enterprise benefit. 

Reality:

It is not enough to simply consider planning, Trade Promotion Management, or even CRM as individual elements. Rather, these separate and distinct processes should evolve into one comprehensive enterprise business process of Trade Revenue Management.

Bringing the strengths of each of the solution components together into an integrated planning framework enables organisations to holistically focus on reducing costs, gaining market share, and driving profitability.

It is important to recognize that manufacturers operate at various levels of maturity with respect to their sales and trade promotion management systems.

Once manufacturers have identified where they exist on the spectrum of the 7 Phases of Sales and Trade Promotion Maturity Model, they can then illuminate the effort required to fully systematize and integrate all facets of their sales, demand, and trade promotions management processes. The path to growth is through Trade Revenue Management life cycle maturity.

From the outset, an organisation needs to set up budgeting, planning and execution components, ensuring the recording of budgeted, planned, committed and actual figures are at a structured and detailed level. Steps must be taken to ensure accuracy and minimize structural changes.

With that foundation in place, sales and spend history will then build up to enable reliable statistics to be analysed and suitable actions taken to improve profitability. Only then should an organisation apply predictive and optimization functions and processes.

Organisations that reach the ‘operationally optimized’ phase of sales and trade promotion maturity will have in place a Trade Revenue Management solution with multidimensional fund management facilities that integrates with their ERP, supported by a multidimensional analytical tool to enable real-time payment, sales, profitability, trade spend, and ROI analysis.

With these tools in place, operationally optimized organisations can empower individuals to make the best decisions possible relative to their trade spend activity.

For the full version of the CGT Straight Talk July-August Edition click here.

Trade and Revenue Management Strategy

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