Closing The Loop On Trade Promotions
Uploaded by
Demand MetricClosing The Loop On Trade Promotions
Uploaded by
Demand MetricCLOSING THE
LOOP ON TRADE
PROMOTIONS
HOW-TO GUIDE
Closing the Loop on Trade Promotions
HOW-TO GUIDE
This report has been designed to provide practical advice for executing effective trade promotion
campaigns.
Read this brief report to learn:
Definition of Trade Promotion
Types of Trade Promotion
Trade Promotion Management Lifecycle
Benefits of Closing the Loop
Measuring Trade Promotion Effectiveness
Read this report to learn how to implement effective trade promotion campaigns. Use our tools to
evaluate different trade promotion campaigns and to demonstrate a measurable ROI.
Trade Promotion Defined
Trade promotion is any expenditure paid directly by a manufacturer to the trade or retail factors
in a given industry as a set amount on a per unit basis or in payment for a merchandising value
provided by the retailer.
- Source: Promotion Marketing Association (PMA)
Trade promotion is a key activity for all consumer marketing plans which encourages increased
short-term sales by effectively decreasing the cost-per-item to the end consumer.
By measuring the incremental increases in sales volume relative to the costs of the trade promotion
campaign, marketers can identify which trade campaigns provide the most return on investment
and optimize their trade plan by investing in the most effective trade channels and promotions.
2 CLOSING THE LOOP ON TRADE PROMOTIONS HOW-TO GUIDE
Types of Trade Promotion Effectiveness
Corporate Promotions
In-Store Displays: point-of-Purchase (POP), Floor Stickers, Feature Display, Carton Display,
Special Racks, Banners, Signs, Mechanical Product Dispensers, Demonstrations, etc.
Temporary Price Reduction (TPR): cents off, Price pack, Bonus pack, Branded pack.
Coupons: grant savings on specified products.
Contests: generates a high degree of customer involvement and website traffic.
Sweepstakes: participants must submit names to be entered in a draw. Can use multiple
mediums. (i.e. POP display and website)
Refunds and Rebates: the offer to return a certain amount of money to the customer.
Premiums: a tangible reward for performing a particular act. (i.e. receive a free bar of soap with
purchase of body wash)
Sampling: allowing the customer to experience the product or service by providing free
samples.
Discretionary/Account Promotions
Templates to be used by key account managers when establishing promotions at their accounts.
Trade Promotion Management Lifecycle
There are 8 major components in the trade promotion management lifecycle for consumer products.
1. Promotion Planning and Modeling - selection of the proper channel, promotional plan, and
estimated results.
2. Presentation - present the campaign to key stakeholders to achieve buy-in or sponsorship.
3. Sales Agreement - between Manufacturer and Retailer
4. Supply Chain Planning and Execution - all aspects of the supply chain must be taken into
consideration before moving forward. Will expediting be necessary? Will inventory levels
change based on the campaign?
5. Retail Execution - carrying out the sales agreement in the market place through the entire
value chain.
6. Settlement - reimbursement from manufacturer to the retailer based on actual sales volumes
& promo costs.
3 CLOSING THE LOOP ON TRADE PROMOTIONS HOW-TO GUIDE
7. Monitoring, Reporting and Post Event Analysis - conducting a Trade Promotion ROI Calcula-
tion.
8. Category Optimization - a comprehensive understanding of trade promotion spend will allow
management to recommend profit maximizing tactics.
Benefits of Closing the Loop
The key benefits of closing the loop on trade promotion by using the preceding lifecycle frame-
work include:
1. Providing management with greater visibility into market’s price elasticity of demand for
specific products.
2. Increased internal collaboration between functional groups within an organization to promote
alignment.
3. If done properly, will result in fewer stock-outs and cost-savings from reduced inventory levels.
4. Helps foster relationships and increase collaboration between retailers and manufacturers.
5. Increase profits for both retailer and manufacturer.
6. Improved management of current promotions based on past performance and reduced
spending on ineffective trade promotion channels and campaign techniques.
7. Building brand awareness & recognition for product lines
8. Helps close the gaps on analytics and generate predictive insights for both retailers and
manufacturers.
Bottom Line
Manufacturers and retailers are becoming increasingly interdependent and trade promotion is a
key collaboration touch point. Currently there are significant gaps between manufacturers and
retailers around analytics and insight.
Closing the loop with trade promotion campaigns can significantly increase ROI by providing
insight into the key drivers of sales volumes and trade promotion costs. Be sure to meticulously
measure the incremental impacts of your trade promotion campaigns to optimize spending for
this channel.
4 CLOSING THE LOOP ON TRADE PROMOTIONS HOW-TO GUIDE
Action Plan
STEP 1 - Learn Best Practices
1 Learn Best
Practices Learn Trade Promotion
Best Practices
Achieve
2 Consensus
To get started read our article
entitled: Trade Promotion
Review Best Practices.
3 Information
Gather
4 Information
5 Set Goals
6 Define Measures
Follow the
7 Framework
8 Monitor
9 Optimize
5 CLOSING THE LOOP ON TRADE PROMOTIONS HOW-TO GUIDE
Log in and download
the complete report!
Not registered yet? Sign up for free to access
over 350 reports, guides, and more than 100 webinars.
CREATE YOUR ACCOUNT
Research
Tools
Training
Software
Demand Metric has the world’s largest library
of practical marketing tools and templates,
all ready for you to customize.
LEARN MORE
Playbooks & Training
Toolkits Courses
Stay on top of the marketing
Our Playbooks are built with best landscape and learn new skills. Our
practices in mind. They contain on-demand video training courses
proven processes and a detailed will help you and your team build
action plan that will help you achieve effective marketing processes on
your objectives and deliver results. more than 20 topics.
Webinars Tools &
Templates
Having clear insight into
Industry professionals, both key metrics and what’s
thought leaders, and behind them is necessary
Demand Metric analysts to improve your end results.
share research results Demonstrate the value your
and best practices that marketing organization is
will help you achieve delivering with our tools
the best results. and templates.
Reports &
Guides
Based on surveys conducted with our member base, we share
how your peers are tackling a broad range of marketing topics
in different formats such as Benchmark Reports, Solution
Studies, Frameworks, and How-to Guides.
sign up for a free trial
It’s time to optimize your
core Marketing Processes.
Not registered yet? Sign up for free to access this report
and over 350 other practical resources for modern marketers.
GET STARTED
