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Trade Promotion Management: A Comprehensive Guide for Optimizing Sales Strategies

Saravanan Krishnakumar< Saravanan Krishnakumar August 10, 2023

In a world where every marketing dollar counts, mastering Trade Promotion Management (TPM) is critical. In this article by Saravanan Krishnakumar, VP Channel Management at Vendavo, discover Trade Promotion Management’s fundamentals and key elements to building a comprehensive TPM strategy.

The best products in the world will not have an impact until they are in the hands of the people and companies that need them. Firms need the right promotional activities to raise awareness about their products and services, but those activities are only successful if the strategies behind them are effective. That is where trade promotion management (TPM) comes in.

Trade promotions play a significant role in driving sales, increasing market share, and building brand loyalty. Trade Promotion Management (TPM) encompasses various aspects, including planning, overseeing, and implementing collaborative promotional initiatives carried out by Consumer Goods (CG) companies with their retail counterparts. 

Consumer Goods companies employ TPM to amplify revenue, expand market reach, and safeguard market share against surging competition and emerging players.

Here is a look at what to know to maximize your company’s trade promotion management efforts.

What is Trade Promotion Management?

Trade promotion management includes several phases of collaborative business processes to ensure the best possible performance and results. A comprehensive TPM solution requires analysis, budgeting, planning, tracking and execution of promotional strategies along with post promotional analysis to improve the promotional cycles. This process helps align your company’s sales promotions with your overall revenue goals.

Recently, the TPM framework has evolved, introducing distinct phases—Trade Promotion Optimization (TPO) and Trade Promotion Execution (TPX). Yet, TPM often encapsulates the entire process under its umbrella, serving as the comprehensive term.

The key is not just to make products or services more appealing to potential buyers, though. You must also align your strategy with your overall sales goals. 

6 Elements of a Comprehensive Trade Promotion Strategy

There are many factors to consider when selecting promotional strategies and channels. They need to make sense for both your company and operations to be effective and have the biggest impact. Here are the elements needed to ensure a trade promotion management strategy covers all its bases:

1. Analysis and planning

The first step in any trade promotion management strategy is to analyze the starting point. Consider the following questions: 

  • Who is your target audience? 
  • Which actions does your audience need to take for the promotion to be successful?
  • Which tactics can and should be implemented, and how will that be executed? 
  • Which metrics will be tracked and how will tracking occur? 
  • How much should they plan to sell in each product line or territory?
  • What is the plan for incentives to achieve those targets?

2. Managing trade promotion budgets

Every promotional strategy should have an allocated budget, and TPM is no exception. Budgets can be allocated at the account or territory level and need to be carefully managed. This involves tailored approaches to trade spend optimization, pricing, and trade marketing to improve a product’s reach or demand, including:

  • Bundles
  • Deductions
  • Discounts
  • Display fixtures
  • Group purchasing organization (GPO) discounts
  • Operator-deviated pricing
  • Rebates
  • Sales-related contests
  • Special pricing

Be sure to determine all the aspects of the campaign that will require funds, then engage in trade spend optimization to ensure the budget is focused on the most impactful elements. Misalignments are often costly, making it important to be aware of how funds are spent. 

3. Setting up management platforms and technology

Understanding the TPM software and tools available in the market and how they can be used to maximize a strategy’s effectiveness are key to a successful trade promotion management system. These solutions streamline the trade promotion process by keeping all the details in one place, making it simple to track spend, progress, and other key performance indicators (KPIs). These solutions can also often be integrated with other business platforms, further improving their ability to track important metrics and provide crucial reporting opportunities. 

4. Trade promotion planning and execution

TPM execution is about tracking the performance, which involves providing incentives based on the sales or activities performed to promote the product. This sometimes includes collaborating with trade partners and retailers, especially those that are already familiar with the company and its products or services. This streamlines execution and monitoring because integrations are already in place with these partners, which often means improved reporting capabilities. The points listed above are some of the strategies used to execute a promotional activity. 

5. Tracking data and analytics

No campaign is effective if there is no process for evaluating and optimizing trade promotions. This starts with identifying and setting KPIs for TPM success. Important KPIs might include sales numbers, inquiries made, product demonstrations requested, appointments set, and contact forms filled out, among other actions. A company can then utilize analytics to measure promotional effectiveness and track how frequently those important actions were taken, creating a baseline for future strategies. 

6. Measuring promotional effectiveness and evaluating performance success

Trade promotion management strategies are successful if the KPIs set before the campaign begins are met or exceeded. You will be able to assess whether your tactics were impactful and whether the budget you set was allocated appropriately, for example. Look at those allocations to see if the funds spent resulted in the actions intended. This will help with return on investment (ROI) analysis, and that can inform future campaigns and strategies to improve effectiveness. 

The elements chosen for a promotional management strategy must align with your company or team’s goals. The various stages of budgeting, executing, and tracking success can and should be adjusted to fit what will be most impactful. Sometimes that requires expert assistance.

How Vendavo Can Help with Trade Promotion Management

The right partner can make all the difference, especially when it comes to technology that can streamline efforts, optimize the sales process, and improve profitability. Vendavo’s Rebate & Channel Manager solution helped a leading confectionary manufacturer do just that, and the impacts on the company’s trade promotion management were substantial: 

  • A centralized platform for commercial promotions
  • Streamlined and automated processes
  • Reduced errors and risk
  • Time and energy saved
  • Better visibility and control over trade promotions
  • Increased exposure, volume, and sales
  • Better managed trade promotions and customer reach
  • Improved profitability
  • Enhanced customer satisfaction 
  • Company-wide rollout with significant impacts on the bottom line

Learn more about Vendavo Rebate & Channel Manager and how it can simplify the execution of your complex agreements – including in trade promotions – with smarter rebate management by clicking here

For more information on how Vendavo can help your company see improved results, reach out today.