Trade Promotion Optimization: Increasing efficiency for promotions

Analysis of past promotions

The basic idea of Trade Promotion Optimization (TPO) is to analyze past promotions and use predictive analytics to predict future promotions that can contribute to sales growth. Past promotions are evaluated based on key figures such as return on investment (ROI). This approach enables targeted and efficient management of trade promotion measures to maximize the return on investments.

The TPO process

TPO plays an important role in increasing the sales volume of consumer goods companies. However, only a few promotions are professionally managed. The TPO process includes

1. the development of a guideline,
2. the creation of a plan and
3. the activation of advertising campaigns.

This process is characterized by cyclical improvement, as each promotion carried out increases the prediction accuracy.

From traditional to data-driven

In the past, promotions were often designed intuitively or planned and carried out as in the previous year. Today, data-driven strategies are essential. More than half of all trade promotions achieve little to no increase in sales (cf. NielsenIQ, LINK, 2022). Therefore, moving from intuition to data-based decisions is an important step. Companies must increasingly rely on analyzed data to optimize their trade promotion strategies and achieve maximum success.

External data and SAP Datasphere

A reliable database is crucial for the success of TPO. External data sources help to better understand the target group and identify trends at an early stage. This makes it possible to gain an advantage in competition with rival brands. In the consumer goods industry, external data can be divided into categories such as sales optimization and brand positioning. Information on brand perception and customer opinions are particularly useful. External data providers such as Drotax, Nielsen or GfK can provide valuable insights here. The integration of external data sources takes place on SAP Datasphere.

SAP Datasphere is a data management solution that enables end-to-end and scalable access to business-critical data. SAP Datasphere forms the basis for a business data fabric that enables companies to provide all data users with meaningful data, including the appropriate business context and logic. With SAP Datasphere, you can ensure more informed decision-making and simplify your data landscape. All existing data sets can be accessed. It does not matter whether the data comes from SAP or Non-SAP-systems, from the cloud or from local sources. Structured or unstructured data can also be integrated. SAP-Datasphere supports better analysis of business data and has the potential to become the single point of truth for TPO.

Overall, the consistent implementation of TPO offers the opportunity to gain insights into the success of promotions. Companies can identify profitable promotions in the future and increase their profits. If you are interested in learning more about optimal promotions, contact us!