Marketing has always been an important aspect in every business—one that nobody could succeed without. Trade promotion in particular will never stop being significant. It’s a technique involving manufacturers and retailers that has been around for a while and given the fact that it is still going strong, we can conclude that it is definitely a successful technique. Learn more about it.
It doesn’t come without its difficulties, though. Companies spend a huge percentage of their revenue on trade promotions, meaning that they have a lot to gain, but also a lot to lose. What if there was a way to decrease the chances of losing? Would you, as a company owner, be willing to take it?
Oh, I bet I know the answer to that question. Nobody likes to lose anything, and businesses in particular don’t like to lose money. So, why don’t we take a look at the method that could help you avoid those loses while not giving up on trade promotions completely? Giving up wouldn’t be a very wise business decision.
Trade Promotion Optimization (TPO)
In case you couldn’t have guessed it all on your own, I’m talking about the concept known as trade promotion optimization (TPO). This concept has proved to be critical to your success. It allows you to take a closer look at the promotion you just ran and inspect it with the aim of improving in the future. Instead of simply stating how successful or unsuccessful a certain strategy was, you get the chance to understand the exact parts that led to success and those that led to failure, helping you avoid mistakes at a later period.
Speaking of mistakes, here are some that you should keep in mind: https://www.nielsen.com/us/en/insights/report/2017/7-costly-trade-promotion-mistakes/
To make things clearer, TPO is the data-driven process designed to help companies minimize their spending while increasing their return on investment (ROI). It is of crucial importance for being more successful in allocating the resources spent on trade promotions. By focusing on previous experiences, identifying mistakes and gaining data-backed insights, this process leads to a business developing a continuous cycle of improvement in this regard.
You are probably wondering what continuity has to do with it, so let me explain. Everything is rather logical and all you have to do is be ready to learn. Learning is actually a part of my explanation here, since learning is what makes continuity possible. Basically, by constantly looking at the data collected from the previous promotion, you will always be learning new things that can lead to improvement.
Steps of TPO
The process known as TPO today consists of more significant steps. Before I get to explaining them, you need to understand that every step is equally important. In other words, this process can be successful only if all the steps are correctly implemented, instead of being skipped or taken for granted. Let’s now take a look at those steps.
Data harmonization is a pretty obvious step that doesn’t require much explanation and it consists of aligning all of your data sources so that everything can be properly analyzed. Of course, next comes the formal measurement of the results of particular promotional events. Now, trade promotion optimization wouldn’t be possible without a strategic analysis of those events, or without proper planning for future activities based on the findings from the previous step. Finally, optimization is a precise mathematical model providing you with the opportunity to generate the perfect promotional calendars for the future.
Do You Need TPO?
Now, if we are to be absolutely nitpicking, then we might say that you don’t need TPO at all. Why? Well, because you can always run your promotional events without any valuable insight from the previous events and hope for the best. Nobody can stop you from continuing to do that without worrying about collecting or analyzing any data.
Yet, if you really want to succeed in increasing your ROI and decreasing trade spend, then you won’t be able to do it without TPO. In other words, this is definitely a necessary process for all of those who are serious about their business. I’m sure that no business owner would pass on the opportunity to increase their ROI.
