Six Benefits of Coupling Demand Signal Management to Trade Promotion Management
Managing trade promotions is still an incredibly important process to consumer products (CP) manufacturers. On average, CP companies spend twenty percent of total revenue on trade.. That’s a huge expenditure that is often made with little visibility into how this money is being spent, which promotions are actually effective, and which ones are a complete failure.
The key to improving trade promotion return on investment is tied directly to the ability to couple consumer demand data to the trade management processes. But many CP companies struggle with this crucial capability. Why? Because they lack a solution platform that enables it.
The SAP Demand Signal Management application powered by the SAP HANA platform enhances the overall value proposition of trade management in a big way. The application allows CP companies to capture external market and retailer data in real time – and combine it with internal business data and state-of-the-art analytics – to sense, assess, and respond to demand signals faster than ever before.
Coupling demand signal management and trade management enables the following benefits to improve the overall trade promotions process:
1. More accurate sales planning and budgeting
Demand signal management allows you to create a very detailed sales plan and budget based on actuals, not estimates or averages, leveraging point-of-sale data, syndicated data, and shipment information. Utilizing the best form of data by account enables a very complete picture of the business to allow for more accurate overall sales planning and budgeting.
2. Better account and promotion planning
Demand signal management allows you to analyze sell-in and sell-out data so you can understand what the forward buy looks like – enabling you to better prepare for each promotion. Built-in exception management allows you to see when data deviates from a certain threshold, triggering actions that help you see exactly what the cycles of demand are going to be for better account and promotion planning.
3. Improved account and promotion optimization
You can now monitor retailer compliance for faster course corrections and claims validation. This ability enables a very clear picture of data coming in based on shipments or consumption, which leads to greater agility in the middle of the promotion. We’re not talking about six weeks after the promotion happens. With demand signal management, course correction midflight is now possible.
4. Enhanced sell-in and negotiation
We all know that having an out-of-stock item can potentially cost you a consumer, sometimes forever. Enabling faster visibility into a promotion’s execution results, what’s on the shelf, what’s selling through at what rates, can certainly go a long way to minimize the out of stocks, out of shelf, and lost sales in these critical promotional periods.
5. Improved promotion execution and settlement
Benchmarking the top- and bottom-selling stores or products within each of your promotions based on actual sales data enables a much more granular view of what’s working and what’s not. This insight can greatly improve promotion execution and settlement.
6. Enhanced evaluation and analysis
CP companies everywhere are struggling with how to understand the true value of their promotions. Which promotions worked for the business? What promotions moved the needle in the right way, which ones simply subsidized my base business, and which ones wasted precious trade funds? SAP Demand Signal Management enables unparalleled post-event analysis based on internal and third-party data.
Fundamentally transform trade promotion management
Applying consumer demand data to the entire trade management process enables CP companies to improve business processes in ways that are not possible without that data. By bringing together point-of-sale data, social media content, and syndicated market data, CP companies can now more accurately predict the revenue, volume, and profitability of a planned promotion for both themselves and their retailers.
This ability fundamentally transforms promotion discussions with retailers from “Here’s what we’d like to promote” to “Here’s how we can partner to win.” You can then follow through with financially viable promotions for both parties based on a solid understanding of what will resonate with consumers.
To learn more about the benefits of coupling demand signal management to trade management, visit http://go.sap.com/solution/industry/consumer-products/trade-management.htmlw.
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 Join research by Promotion Optimization Institute and Gartner as published in “Charting Your Course to Trade Promotion Optimization Amid Economic Storm Opportunity” by Accenture.