TPM or Trade Promotion Management represents promotion management for products that a manufacturer sells via the trade channel, also including a tight integration with the sales process.
SAP’s Trade Promotion Management solution empowers Account and Trade Managers to improve control and visibility of the entire trade promotion process.
The end-to-end solution enables managers to accurately plan, maximize profitability and increase brand presence with trade activities.
SAP’s TPM Processes help companies:
- Optimally allocate trade funds
- Centrally manage and align all trade activities
- Close the loop on payments and deductions
- Gain insights into trade promotion effectiveness
- Increase planning and forecasting accuracy
TPM is typically used by consumer products companies, although high tech or retail companies could also take advantage of this process solution. It is closely linked to the sales process where key account managers manage specific retailer and/or wholesaler accounts. It’s also possible to have category managers who manage the products.
A manufacturer (i.e. a consumer products company) will plan trade promotions when they want to promote products with a retailer and/or wholesaler by giving additional discounts on the product(s). Manufacturers will utilize trade promotions for many different reasons:
- Intended to close any ‘gaps’ between baseline sales volumes and sales goals; i.e. baseline sales volumes = $1 million but sales goal = $1.2 million – trade promotions would be created to generate the additional $200,000 in sales to meet overall sales goal
- Maintaining relationship with accounts (i.e. a retailer demands lower price to sell products)
- Defend shelf space (i.e. make sure product is placed in the best spot to get consumers maximum attention)
- Defend against competitor promotions (i.e. direct competitor is executing a promotion which is cutting into sales so you create a promotion to keep from losing sales)
- Introduce a new product (so you give a special discount to get consumers to try it)
- Increase revenue by promoting during special events (i.e. holidays or Super Bowl)
- To sell products whose shelf life is coming to an end so that products don’t have to be destroyed
Typically discounts are given to retailer and/or wholesaler for a specified promotional period. Because of this, SAP’s TPM solution supports both short-term and long-term promotions. Moreover, there is usually also a consumer-facing aspect of the promotion; i.e. retailer receives a certain discount ($1.00 off/case ordered) for giving the consumer a discount (buy one get one ½ off) at the point-of-sale.
SAP’s TPM solution is integrated with other applications to provide a full-loop, end-to-end process. TPM is integrated with ERP sales orders and billing. This means that ERP sales orders automatically ‘pick up’ the promotion that was created in CRM and applies the appropriate discount. Additionally, the ERP sales volumes and discounts are updated and visualized within CRM. SAP TPM is integrated with CRM Funds and Claims Management and is also integrated to APO for demand planning, FSCM for dispute management and Sales and Distribution (SD) in ERP.
For more information, please see the RKT Material on the SAP Service Marketplace under http://service.sap.com/rkt-crm -> CRM 2007 -> Trade Promotion Management