Optimizing trade promotions for a global consumer products manufacturer

Business Problem

Consumer product goods (CPG) manufacturers and retailers today are facing a competitive, bargain-driven market. Although trade promotions are ever-present, a recent survey by POI showed that only 21% of CPG manufacturers are satisfied with their ability to manage promotions. Trade promotions often consume over 20 percent of revenue. Yet promotion planning is done largely without intelligent event analytics or the help of data science.

The Analytics team at a top CPG manufacturer faced these same challenges.

Issues

  • The promotion evaluation process was hindered by the disparate and disjointed sources of data.
  •  Analysis of promotion effectiveness was a manual, spreadsheet-driven process.
  • Trade spend evaluations could only be performed once a quarter.
  • Data analysts spent more time gathering and cleansing data than analyzing promotion effectiveness.

The SpendO Way

SpendO is a breakthrough solution that offers both automated and manual validation steps. SpendO integrated the company’s five disparate data sources, harmonized and cleansed the data. We used a powerful, patented matching engine that mapped the company’s products and customer hierarchies.

SpendO created a simple method for manual intervention into the data, and an easy way for the users to alter business rule configurations. In this way, the solution maintained the delicate balance between automating data integration and algorithms, while allowing for human intervention to check the results and correct errors.

SpendO did this with just enough user orchestration and oversight of automated, integrated processes, consistent and well-documented business definitions, and a flexible, unified user interface for analysis.

Key Outcomes

A critical aspect of the success at this global CPG manufacturer was the flexibility of the solution. By allowing for human intervention, the solution allows the trade promotions teams to modify business rules, check the business logic, and correct errors that may not be obvious.

More effective trade promotions, impacting the top line

  • Rebalanced trade funding to align with strategic initiatives.
  • Focused trade spend against promotion-sensitive products and categories.
  • Increased sell-through.

More efficient trade promotions, impacting the bottom line

  • A higher return on trade promotion spend.
  • Doubled the number of events analyzed.
  • Increased the number of retailers analyzed by 30%.
  • Quickly identified the 15% highest performing promotions.
  • Easily identified the 10% lowest performing promotions.

Reduced cost of promotional spend

  • The company was able to increase incentives to high ROI retailers.
  • Promotional dollars were shifted to high ROI products.
  • Identified optimal base-price and promoted-price volumes and profits.