We often receive questions like ‘What is the difference between Market Development Funds (MDF) and Trade Promotion Management?’
Here are some of my thoughts….
What is TPM and MDF?
Trade Promotion Management (TPM) represents promotion management for products, e.g. special discount/conditions for selling products – so a tight integration with the pre-sales/sales process is given. Market Development Funds (MDF) targets marketing activities executed by partners (or other internal departments) without such a tight product selling linkage but focusing on expanding marketing reach, increasing brand awareness, and stimulating demand. For sure there is thin overlap for TPM and MDF, but it can be seen separately, as different departments are dealing with promotions and with partner marketing activities.·
What are some of the differences between MDF and TPM?
MDF is a marketing-driven process, in that, the Marketing Department is typically driving these activities; whereas TPM is a sales-driven process in that the Sales Department is typically driving these activities. Trade Promotions are managed by the key account manager (or sales representative) in his CRM system. Collaboration and agreements with the retailers are only managed by the key account manager in SAP CRM, using the Agreements business object – only internal users participate. Whereas MDF is a collaborative process for which the interaction between brand owner and channel partners is supported by SAP CRM. Partners or retailers are allowed controlled access to the system. TPM has Claims which are created either by a deduction claim instigated in ERP or an invoice claim instigated in CRM, always after a sale of the promoted product has taken place. Whereas MDF claims are done based on the expenditures of a marketing activity for a product is executed and is solely processed in CRM (only payout via ERP).
The few common aspects between TPM and MDF: one of them being a way to request for money from the manufacturer; track how the money was spent; workflow for approvals. In the solution both the MDF programs and the trade promotions can be visualized and tracked within the Marketing Calendar. Both share Funds Management and Claims Management framework for their business process.