Trade promotion and their role in Selling Term Paper Submitted towards Partial Fulfillment Of Post Graduate Diploma

in Management (Approved by AICTE, Govt. of India) Academic session 2010-2012

Under the Guidance of: Prof. Timira Shukla Submitted By: Alpana Ganguly BM-010017 Aman Goel BM-010018 Amanpreet Kaur BM-010019 Ambika Saxena BM-010020 Amit Raj BM-010021

ACKNOWLEDGEMENT
The satisfaction and the happiness that accompanies the successful completion of any task would be incomplete without expression of appreciation and gratitude to those people who made it possible. Indeed, We consider it as a pleasant duty, though equally difficult to acknowledge the motivating efforts of several people who have helped us in bringing this term paper to find its delight. We express our sincere thanks to our faculty guide Prof. Timira Shukla, Without whose support and co-operation, the completion of this Term paper would have been close to impossible. We are immensely grateful to her for showing all round guidance and personal interest in my work. We are thankful to many others who either directly or indirectly who have helped us in successful completion of this Term paper. Finally, We owe our gratitude to our parents and our dear friends who have always stood by us and had been our moral support with sheer zeal and enthusiasm at the worry and we dedicate our work to them. Sincerely Alpana Ganguly BM-010017 Aman Goel BM-010018 Amanpreet Kaur BM-010019 Ambika Saxena BM-010020 Amit Raj BM-010021

INDEX CHAPTE R NO. 1 2 3 4 5 6 7 8 9 10 PARTICULAR Meaning of Trade promotions Trade promotion Goals Types of Trade Promotions Factors to be considered for Increasing trade promotion Spendings Effect and Success of Trade promotion Challenges of Trade Management Ways of effective Trade Promotion Case of Hindustan latex ltd ( HLL) Limitations PAGE NO 3-4 5-7 8-13 14-15 16-18 19-21 22-23 24 25-26

CHAPTER-1 MEANING OF TRADE PROMOTION

In marketing, the trade typically refers to the business relationships that exist between final producers, retailers, and wholesalers. To marketers, trade promotion refers to promotional activities that occur between these channel members. Because the prominence of independent wholesaling has dramatically declined over the last several decades, trade promotion largely consists of promotional activities offered by manufacturer to retailers. That is the context of the discussion here. In business and marketing, trade refers to the relationship between manufacturers and retailers. Trade Promotion refers to marketing activities that are executed in retail between these two partners. Trade Promotion is a marketing technique aimed at increasing demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, and more. Trade Promotions can offer several benefits to businesses. Retail stores can be an extremely competitive environment; trade promotions can help companies differentiate their products from the competition. Companies can utilize Trade Promotions to increase product visibility and brand awareness with consumers. Trade Promotions can also increase a products consumption rate, or the average quantity of a product used by consumers in a given time period. Furthermore, effective Trade Promotions can enlarge a products market segment penetration, or the products total sales in proportion to the categorys competition. Moreover, companies use Trade Promotions to improve distribution of their product(s) at retailers and strengthen relationships with retailers. Lastly, Trade Promotions can be leveraged to introduce new product launches into retail stores. Manufacturers of consumer products have always struggled to manage customer relationships, execute effective promotional activities and measure consumer response in their distribution channels. Over the past century and a half or so, trade funds, coop advertising, market development funds or other soft dollar programs designed to stimulate demand have increased in both complexity and volume. The percentage of trade funds to gross revenues has risen from just slightly over 3% in 1930 to almost 20% today. Fueled by a nearly 3x increase since the mid 1980s, trade spending is now the second largest expense item on most consumer manufacturers P&L's.

CHAPTER-2 TRADE PROMOTION GOALS

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1. Timeframe of trade promotion goals- In contrast to trade promotion, promotion managers typically set either brand building or transaction building goals for consumer promotion. Goals for trade promotion differ from those set for consumer promotion largely because the criteria for evaluating purchases differ between consumers and organizational buyers. Consumers, who buy for their own personal or household uses, often develop attachments to brands because those brands satisfy psychological needs. In consumers, brands can evoke feelings of warmth, self-confidence, security, and a host of other emotions. Although the source of these emotions may be very functional benefits provided by the brands, the emotional attachment consumers feel toward their favorite brands is an increasingly important part of consumer promotion. Recall that brand building consumer-oriented sales promotion attempts to cultivate consumers emotional brand attachments. Organization buyers, on the other hand, make purchases to meet the objectives of their organizations, which are rarely emotional. Businesses, as you would expect, focus heavily on achieving financial performance superior to that of their competitors. Therefore, attractive brands will be those that assist in the pursuit of these goals. This should not imply that businesses focus exclusively on short-term financial performance; relationship building among buyers and sellers in distribution channels is becoming increasingly common. However, where trade promotion is concerned, short term goals usually dominate decision making. Manufacturers design individual trade promotions with short term financial goals in mind; retailers encourage, suggest or participate in individual trade promotions with short term financial goals in mind. Long-term goals apply more to the general philosophy a firm has toward offering or participating in trade promotions. Some manufacturers, for example, use trade promotions aggressively making frequent and varied offers to retailers. Retailers whose purchasing philosophies match those of the manufacturer may be well-suited to carry the manufacturers brands, feature them frequently in their own promotional activities, and perhaps provide them with favorable shelf-space in their stores. Thus, while both sides of the buyer-seller dyad view single trade promotion offers in the short term, the totality of trade promotions offered by sellers to buyers play an important role in building buyer- seller relationships. Typical goals of trade promotion 6

Manufacturers offer trade promotions to retailers with any or all of three goals in mind. As you consider each of these reasons, think about how the promotional goals emphasize the short term, although each can be part of a long-term strategy to build a relationship with the retailer. A. Expanding distribution- Manufacturers use trade promotion to expand distribution of their products, which can occur within stores or to new stores. Within stores, manufacturers use trade promotion to obtain more or better shelf space. Depending on the type of product being sold, manufacturers may also seek to expand the number of retailers carrying the product by offering retailers inducement to do so. Newer products, regional products being rolled out nationally, or products being targeted to new markets all may need retail outlets to carry the product. Unless the manufacturer can make doing so worthwhile for the retailer, the retailer will likely remain reluctant to provide even marginal shelf space. Various trade promotion tools assist the manufacturer in convincing the retailer that carrying the product will prove profitable. B. Inventory control- Manufacturers use trade promotion to control their inventories, particularly by encouraging the retailer to keep more of the manufacturers product on hand. This can be important to the manufacturer for several reasons. For one thing, manufacturers may wish to transfer some of the product storage costs to the retailer. For another, manufacturers may want retailers to stock up on a particular product in advance of a consumer promotion, thereby avoiding stockouts. Finally, manufacturers may wish for retailers to build product inventories to reduce their ability to stock a competitors product, particularly if the competitor is about to offer a special promotional deal. C. Encourage retail promotion- Manufacturers use trade promotion to encourage retailers to promote the manufacturers brands. If the manufacturer plans on a manufacturer promotion, then trade promotion could help ensure broad retailer participation. Or, the manufacturer might wish to offer savings that the retailer can pass on to their customers, perhaps in the form of a temporary price break. Also, large powerful retailers can pressure manufacturers into offering special promotions, sometimes custom made for the retailer. Under these circumstances, manufacturers may appreciate the extra attention and exposure, but financially retailers can drive a hard bargain.

CHAPTER-3 TYPES OF TRADE PROMOTIONS

1. Price-based trade promotions8

It refers to the several types of temporary reductions in the manufacturers price to retailers as price-based trade promotions. These different types of price reductions vary by their length of time, the basis on which the price reduction is granted, the size of the reduction, and how the price reduction is paid. Although the following discussion references manufacturer-retailer relationships, price- based trade promotions occur anywhere in the channel. However, in industrial channels, sellers care nothing about pass through; trade promotion in industrial channels primarily reflects responses to seller competition or adjustment of seller inventories. A- Off-invoice discounts- Also known simply as price offs, off-invoice discounts provide a simple and straightforward trade promotion tool. When offering offinvoice discounts, manufacturers simply deduct some percentage from the invoice price for purchases made during the deal period, which may last. The off invoice discount may be offered in a couple of variations. One is the quantity discount, which offers greater percentage discounts for larger purchases. Quantity discounts may actually be used to discourage stockpiling and encourage pass through of at least some of the discount. To get higher discounts, retailers buy more of the product, which may exceed that which theyre able to store economically. In turn, retailers must reduce their prices to reduce their inventories. Another variation is the merchandise allowance in which the manufacturer offers the price reduction in the form of additional merchandise. For example, a manufacturer may offer ten units for the price of nine. Manufacturers like to use off-invoice and quantity discounts because retailers appreciate them most; manufacturers looking to please their good customers frequently turn to this trade promotional tool. Retailers appreciate them because the discounts are in cash, and therefore permit the greatest flexibility in terms of how to take advantage of the discount. Of course, if manufacturers want the discount to be passed through to consumers, they might consider a less flexible trade promotional tool. Chances are that if they offer a simple off-invoice discount, retailer will keep most or the entire discount. B- Performance incentives- In order to limit retailers ability to pocket trade

discounts, manufacturers may offer performance incentives, in which the manufacturers discounts only that merchandise that the retailer sells at a discount to their consumers. In other words, the manufacturer stipulates no pass through, no trade deal. Retailers dislike performance incentives because they must pass through the discount. As such, their effective long-term use may be dictated by the relative power of the retailers and manufacturers involved. Performance incentives require more detailed bookkeeping than simple offinvoice discounts because retailer sales during the deal period must be verified. Manufacturers use any of several verification methods. Perhaps the most common is the bill back. With bill-backs, the retailer pays the manufacturer full price for the merchandise being discounted, and then after the deal expires, the retailer sends the manufacturer verification of the number of units sold and their retail price during the deal period. The manufacturer then sends the retailer payment equal to the trade discount. For example - Suppose a retailer normally pays a manufacturer Rs 2.00 per unit for its merchandise and sells the merchandise to consumers for Rs 3.00. Suppose also that the manufacturer tells the retailer that if the retailer discounts the retail price to Rs 2.50 for one week, then the manufacturer will reduce its price to the retailer by Rs .50 per unit. By the end of the week, the retailer sells 100 units. To receive the discount from the manufacturer, the retailer sends the manufacturer verification that it sold 100 units at Rs 2.50. The manufacturer would then send the retailer a check for Rs 50.00. C- Sales quotas- Just as sales managers may set quotas for their sales forces, manufacturers can set sales quotas for retailers. Generally speaking, however, manufacturers only use sales quotas with retailers that are exclusive dealers of manufacturers products. For example, automobile dealerships may receive sales quotas from carmakers. The sales quotas provide for percentage increases over previous years sales. The quotas work by simply offering discounts or rebate payments to retailers who meet the manufacturers sales quotas. 2. Nonprice-based trade promotionsBeyond discounts in price, manufacturers can offer an almost infinite number of other 10

inducements to carry or feature the manufacturers products. Many of these trade promotional tools reflect retailers rise in power within distribution channels and the deference manufacturers may show as a result.

A. Slotting allowances- For a time, slotting allowances were controversial considered a kind of blackmail by retailers. The controversy has largely faded, though, and slotting allowances remain an accepted part of the retailing landscape. Simply put, slotting allowances are the price retailers charge manufacturers for shelf space, or slots. Generally speaking, slotting allowances are paid for new and speculative products, which have no history of successful retail sales. Retailers defend the practice of charging slotting allowances by pointing out that shelf space is their product, which is limited within each store. By granting shelf space to a losing product, retailers forego the opportunity to stock a successful product in that shelf space. Retailers also argue that slotting allowances reimburse them for the costs of carrying a product. Shelving products incurs storage, transportation, and labor costs that are borne by the retailer. Slotting allowances help them recoup those expenses. In truth, however, the costs of stocking and shelving products is part of a retailers normal operating expense; slotting allowances really represent retailers recognition that their shelf space is a valuable economic asset that they can force manufacturers to pay for. B. In-store displays- In-store displays are promotional fixtures in retail stores. Variations of in-store displays include Point-of-Sale Displays, which are located near cash registers to encourage impulse buying; Floor Stickers, or advertisements for products on the aisle of a store; Feature Displays, which can be located at the end of an aisle to draw attention to a product; and Special Racks, or manipulation of a store shelf to make more space available for a product or bring attention to the promoted product. In-store Displays can be perceived as more visually appealing to consumers than product alone on a retail shelf.

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C. Promotional allowances- Promotional allowance is a broad term that covers simple cash payments by manufacturers to retailers intended to encourage retailers to promote the manufacturers brands. These payments are often called push money. A manufacturer may pay push money in hopes that the retailer will use at least some of it to promote the manufacturers products in some way, usually at the complete discretion of the retailer. Promotional allowances work much the sale as slotting allowances, but with three important differences. First, manufacturers pay promotional allowances on products already carried by the retailer, so the product has a purchase history and the retailer has already agreed to stock it. Second, because the product is already on the shelf, push money is intended to encourage promotion of the product beyond simply putting it in stores. And third, retailers require slotting allowances for new products; push money is used by manufacturers to generate goodwill with powerful retailers. D. Spiffs- Manufacturers need not direct trade promotion dollars to retail management or ownership. Spiffs are directed to retail salesforces. Manufacturers may set sales goals for the salespeople of the retailers carrying the product and then pay salespeople directly for achieving those goals. Retailers at first resisted spiff payments to their salesforces because they felt the payments undercut their ability to direct salesforce efforts as they saw fit. Moreover, manufacturers could not offer or administer the

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payments without cooperation from retailers. Retailers have largely dropped their resistance to the practice because refusing to allow them to be paid actually produced great animosity by salespeople toward the retailers they worked for. Indeed, in many product categories, spiff payments have become so common that spiff checks are a normal part of salesperson compensation and are actually used by retailers as a recruiting tool. E. Trade contests- Trade contests are a variation of spiffs in the sense that they represent manufacturer compensation directly to retail salesforces. Manufacturers set sales goals for several retail salesforces, either within a single chain or perhaps between salesforces of competing chains. The winners receive a substantial usually noncash prize such as a trip to an exotic location. F. Cooperative advertising- Manufacturers establish cooperative (or just coop) advertising programs to encourage retailers to feature the manufacturers products prominently in retail advertising. Under these programs, manufacturers agree to pay a portion of a retailers advertising expenses if the retailers advertising meets certain requirements for showcasing the manufacturers brands. Although most frequently applied to media expenses, retailers can receive coop-advertising support for advertising production costs too. For example - Many manufacturers provide professionally prepared print advertising art to retailers at no charge. This may be particularly useful to small retailers who could not afford the services of a high-quality professional graphic artist. Many coop-advertising programs require retailers to earn coop dollars under some formula that combines retail advertising spending with sales of the manufacturers products by the retailer. Additionally, to qualify for coop advertising dollars, advertising copy must meet certain requirements for how often the manufacturers brand is mentioned or how prominently the brand appears visually. G. Sampling- Sampling allows consumers to try the product either in-store or via free samples before buying it. This can reduce consumers apprehension about buying a new product or introduce them to a product they were unfamiliar with before.

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H. Other trade promotional tools- As noted earlier, manufacturers dream up new types of trade promotions or variations on existing ones all the time. The ones described above generally receive the lions share of trade promotion expenditures, however, other effective techniques are available as well. One familiar trade promotional tool is display assistance. Many manufacturers provide elaborate product displays either temporary for special events, or permanent installations that help consumers more easily select products. Manufacturers frequently offer these displays to retailers at no charge. Manufacturers promote their products to retailers through special training programs for retail salespeople. If a manufacturers product requires special training to sell or operate effectively, the manufacturer may offer special training, which may be conducted in exotic locations so that retail sales forces may mix business with pleasure. Many manufacturers attempt to reach retailers through trade shows and industry conventions. The tradeshow industry itself has grown to multi-billion dollar proportions, in part because tradeshows may put manufacturers in contact with hundreds if not thousands of retailers.

CHAPTER- 4 FACTORS TO BE CONSIDERED FOR INCREASING TRADE PROMOTION SPENDING

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The two real drivers of trade spending growth are 1) Increasingly sophisticated consumers and 2) The massive, but resource-strapped retailers who must cater to them in an ever-increasing number of formats and channels. The Changing Consumer Consumers are switching brands, retailers and channels more than ever before. 68% are brand switchers. Only 5% are loyal to one brand.

73% shop in five or more channels. Only 26% are loyal to a particular retailer.

A new thrifty behavior is emerging with the economic downturn, so that consumer perceptions of value often trump loyalty. Social networks are emerging as a source of truth about brands3, fueling even more brand switching.

In essence, the consumer has matured; and with that maturity comes a more daunting task for both manufacturers and resellers alike doing more than ever to attract, deliver and maintain a loyal consuming public. According to a February 2009 paper, AMR Research pointed out that in the beginning of 2008, 40% of the decisions the shopper made took place

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at the shelf. The Changing Retailer The Changing Retailer Retailers continue to consolidate and increase their leverage. Meanwhile, company failures are becoming more commonplace against the perfect storm of both the competition and the economy. Many consumers serve only a handful of major retail channel partners reducing their clout in the relationship.

Sensing their increasing presence in the consumers shopping experience, many retailers have invested in their own brand image, expanded store brands, and implemented shopper marketing strategies, all of which affect the role of consumer brands.

CHAPTER-5 EFFECT AND SUCCESS FROM TRADE PROMOTION As with consumer-oriented sales promotion, evaluating the success of

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trade promotion relies on estimating whether the additional profits garnered by the promotion exceed the opportunity costs of selling at discount to those who would have purchased at the regular price. In the case of trade promotion, we can examine the sources of additional profits more closely because tracking these sources presents less of a problem in a trade environment than it does in a consumer environment. This is because there are fewer retailers and other trade customers than there are consumers. Moreover, producers carefully track the trade deals offered to and purchases made by retailers. This kind of individual customer tracking occurs less frequently in consumer markets given the millions of small individual purchases consumers make daily. Still, evaluating the profitability of trade promotion follows similar logic to evaluating consumer-oriented sales promotion.

By the above graph it shows the sources of the sales increases to retailers brought on by a trade deal. Several features of this graph merit mentioning

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relative to the similar graph given in the Web Notes on consumer-oriented sales promotion. First, the sales line does not stay level in the period prior to the trade deal; instead it dips slightly in anticipation of it. This is because the manufacturers sales force likely makes many customers aware of the pending promotion and advises customers to delay their purchases until the promotion begins. Second, the sales curve during the promotional period assumes something of a V-shape at the top. This shape results from retailers purchasing on deal twice during the promotional period. Many make an initial purchase, determine how much to pass through, divert, or stockpile, then purchase additional amounts toward the end of the promotional period if necessary. Third, the sales line dips below its average baseline level following the promotion. This feature shows the effects of stockpiling and forward buying. Finally note that in this example, the promotional offer lasts for two periods. While trade promotion offers vary in duration, they typically last somewhat longer than many consumer-oriented sales promotions.

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CHAPTER- 6 CHALLENGES OF TRADE MANAGEMENT There are six key challenges that manufacturers must confront to enhance their trade management effectiveness:
1.

Establish an effective trade management process

The specific pillars that are related to trade management include: Advanced Trade Planning The processes of account planning that include forecasting, sales volume planning, predictive modeling and fund allocation.

Trade Promotion Management The processes surrounding fund management and accounting, claim audit and deduction management, and settlement.

Retail Coverage Planning and Execution The processes of trade and brand coverage planning, objectives planning, route scheduling,

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visit planning, and on-site execution functions of performance compliance, store audit, cash and order management. The latter is generally performed on a disconnected mobile handheld device.

Demand Signal Management Using retail point of sale data as the primary source of intelligence, this process combines elements of category and brand management, price management, competitive tracking and retailer performance score carding to guide account teams toward more effective analysis of business operations and financial ROI.

2.Invest in technology to automate the process Most IT organizations have so far focused on improving the transactional technology that accounts for trade fund spending, emerging from three decades of manual procedures, spreadsheets and cumbersome internally developed solutions. Setting IT budget priority that matches the level of corporate spending and opportunity Evolving from desktop tools and homegrown legacy solutions to enterprise-class technology 3. Capture and harmonize disparate demand signals Consumer goods companies are swamped with data - both internal as well as external. Manufacturers must deal with an ever increasing number of sources, from outbound shipments to syndicated market data to store level consumption data. The first step is to bring all of that data into one single source of intelligence. Multiple data sources, which are not aligned, synchronized,

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integrated or timely, hinder trade planning and management. Diverse data sources also create conflicting reports, putting data quality (accuracy and breadth) in question. 4. Improve account planning and retail execution The ability to transmit marketing and promotion campaigns to actionable in-store performance continues to be a challenge in developed markets and almost an impossible task in developing geographies. Today, most manufacturers today rely upon a combination of spreadsheets and one or more data warehouses to plan and analyze their trade coverage resulting in: Difficulty aggregating account plans or creating rolling estimates Limited scenario modeling capabilities Lack of tools and software conducive for mobile use, joint retailer planning, or sales productivity 5. Transition promotion planning from an art to a science Promotion plans are still too often the result of guesswork or inertia (minor revisions to last years plan). 74% of planned trade expenditures are based on history, perpetuating poor historical performance.11 Data driven analytical models are already more reliable than traditional methods of estimating performance under most conditions, and more importantly, they make it possible to plan hundreds of localized promotions that would be beyond the capacity of manual approaches. 6. Get real-time visibility to trade plans and promotion results Companies generally lack the end-to-end view of financial, marketing and sales resulting from effective promotions. This partial visibility of market conditions results in multiple forecasts for revenue, volume, and trade
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spend. Differences in understanding among functional teams limit collaboration both internally and externally.

CHAPTER-7 WAYS OF EFFECTIVE TRADE PROMOTION Displays and DealsAll promotions are not created equal. Nor do they have equal impact and except the dealers some of the points, which may give another way to implement the trade promotion, accept the dealer method. 1. Characteristics of Categories with High Display Response 14 of top 15 display categories are either Must Have products or Easy to Eat meals Most are stockable

Tend to have above average sensitivity to promoted price changes.

2. Characteristics of Categories with High Feature Response Many utility products that are frequently purchased in Mass channel Consumed on a frequent basis, often for lunch or quick dinner Tend to be higher price
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 Have above average response to promoted price and displays Another factor influencing the ability of displays to drive sales is unit price. Consumer shopping patterns expose the fact that shoppers are less likely to purchase expensive items on display or with a temporary price reduction (TPR). 3. Proper Ways to Promote Expensive Item Shift display space from high to low price items unless they are impulse driven or have reasonable discount Large discounts needed to drive volume with TPRs 4. What Works When Pricing Multiples Expandable consumption Easily stored Heavily promoted categories Logical multiples Total price at or below $10 Price per unit of $1.00, such as 10 for $10. 5. Price Responsiveness Varies by Channel Food highly responsive to regular and promoted price changes Drug people look for convenience before price

Mass lower regular prices means consumers value TPRs

less than in Food On the display front, food shoppers prove to be high impulse/unplanned utility item buyers. Drug channel consumers plan their purchases and look for features, but are less responsive to displays, and mass merchandiser patrons exhibit an average response to displays, seeking overall value from

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the channel on the regular price. 6. Promotion Responsiveness Varies by Channel Food High impulse and unplanned utility item purchases drive display lifts Drug Planned purchases make features impactful and displays less relevant Mass Average response to promotions, shoppers looking for overall value with regular price So these are the ways in which we can do our trade promotion with best effective manner. CHAPTER-8 CASE OF HINDUSTAN LATEX LIMITED (HLL) Hindustan latex limited (HLL) has efficiently used sales promotion to expand the sales of contraceptives in the rural marketing project undertaken by the company in Uttar Pradesh, a state (province) in northern India. In order to achieve Market penetration and Sales target for contraceptives, the company has designed and implemented several trade and consumer promotion schemes. The trade promotion consists of scratch card schemes and frequent buyer schemes, and was targeted at dealers, stockiest and retailers to increase stock pressure at retail points in the rural areas. The company became the pioneer in introducing consumer promotion schemes in contraceptives in rural areas when, for Rakshak brand, it came out with the Rakshak Love in Singapore offer which promised to send couples on private holiday in Places such as Singapore, Manali and khajuraho and Rakshak Mahasuraksha offer where it offered two blades free with each
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wallet of Rakshak. The objectives of these offers were to increase the offtake from the retail counters, and to provide strong point-of-sale support. Through a mix of sales promotion schemes and the contraceptive rural marketing efforts, this promotion by the company emerged to be one of the largest social marketing projects in the world in terms of the number of units of Rakshak sold.

CHAPTER-9 LIMITATION Lack of accurate and timely information Trade promotion decisions are often rushed and based on sub-par data. While Sales and Marketing managers are surrounded by promotion information, questions on retail commitment and product forecast accuracy can hinder the process. Multiple data sources and conflicting needs from various departments further complicate the issue. Inability to plan promotions based on analytics Historical trade promotion data should be analyzed in order to continually improve trade promotions. If a company does not utilize processes and systems that measure trade promotion performance, future trade promotion executions could be less effective than if theyd been planned using past analytical information.

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Ineffective organization and partner integration Lack of integration both internally and with external partners can hinder trade promotion success. Key elements of organizational integration include standardized metrics, regular information sharing, cross-functional department collaboration, and collaborative processes4. Integration with retail partners is important to executing promotions successfully, as well as maintains strong relationships with retailers over time.

Lack of appropriate Key Performance Indicators (KPI) KPIs tell manufacturers and retailers how trade promotions performed relative to their pre-determined objectives. A lack of understanding on what trade promotion data to measure and how to measure performance can hinder the overall process. Manufacturers and retailers will not know what made a promotion effective or ineffective unless they have predetermined data points to measure and analyze.

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