Within this scenario, probably the most difficult and pricey challenges facing manufacturers is how you can maximize returns from trade spending, or spending targeted at marketing to distributors, wholesalers and retailers. Based on one survey by AC Nielsen, trade marketing spend consumes 11 percent of sales, which makes it the second biggest cost next simply to the price of goods offered. Furthermore, trade marketing also places a substantial burden on administrative sources.
Regardless of this, research has shown that many trade marketing and promotion programs are neither cost-effective nor efficient as marketing and advertising tools. Studies suggest that just about 90 percent of trade marketing initiatives don’t create a positive roi.
The issue exists partially due to ineffective business processes that characterize most manufacturer-store relationships: relationships not altered because manufacturers fear the reactions of the prized customers who’ve so far profited. The larger problem, however, is based on the sheer lack of ability on most manufacturers to correctly track and control trade spending.
Thus, if CPG companies can redirect inefficient spends and lower excess promotion costs, they are in position to obtain a dramatic rise in returns from sales.
Automation solutions offer CPG companies numerous significant advantages in trade marketing and promotion:
Advantage #1: They permit manufacturers to evaluate markets segmented based on consumers/ products, and plan and execute full-cycle trade marketing initiatives accordingly. Additionally they allow manufacturers to precisely plan their initiatives and incorporate anticipated incremental sales volumes into sales forecasts.
Advantage #2: They offer real-time data on trade fund spending, marketing performance and so forth, in addition to permit the reallocation of funds across accounts and channels. Automated solutions also allow field sales people to simply monitor store compliance remotely or through store visits.
Advantage #3: Many solutions also let manufacturers automate deductions, claims and settlements. This exempts them in the pricey and inefficient task of following paper trails on claims, a extended procedure that retailers frequently exploit to their personal advantage.
Advantage #4: No trade marketing initiative is finished without accurate analysis of profitability, that is in no way always easy. Automated trade marketing solutions allow manufacturers to evaluate profitability according to a multitude of key performance indicators (KPI).
Solutions for CPGs
A number of SAP and Siebel solutions are for sale to automating trade marketing. Oracle Trade Management, for example, is really a comprehensive solution for CPGs. With focus on integrated business flows, it targets helping manufacturers adopt guidelines to align data, automate processes, and evaluate customers and promotions.
Siebel eConsumer Goods 7 is yet another CPG-specific solution, which includes industry guidelines for trade promotion management, trade funds management, and deduction resolution. It delivers pre-built integration with back-office systems, including SAP.
The SAP CRM Trade Promotion Management and Marketing Development Finds solutions are equipped for companies using trade funds to advertise turnover, and getting difficulty selection on how and where they’re spent and taken into account, in addition to their effectiveness.
Among analytics applications, the Oracle Siebel Analytic Applications for Trade Management provide an open architecture that gives much better ease of access towards the data warehouse supporting a variety of analyses. The SAP® xApp(TM) Analytics Composite Application for Consumer Products provides info on a number of KPIs for example trade promotions by funnel, tactic analysis by sales, actual versus planned promotion sales, actual versus planned budget and budget availability.