10 Data-Driven Strategies for Trade Promotion Optimization in the CPG Industry

10 Data-Driven Strategies for Trade Promotion Optimization in the CPG Industry
7 min read

Data analytics in the CPG industry is gaining more and more importance, but how do you apply it to your pricing and promotion strategies? Learn how advanced CPG Data Analytics enables companies to finally nail trade promotions.

Consumer packaged goods companies spend billions yearly on trade promotions, but results don't always come. In the current scenario, with shifting consumer behavior and uncertain market conditions, pressure is adding up on CPG companies, which need bulletproof strategies to win over the competition. And on average, CPG companies spend 10% of gross sales revenue on trade promotions, and 55% of them stated they have increased spending in the last five years.

But what to do when results are not coming? This is where trade promotion optimization (TPO) comes into play. Learn the main benefits of CPG analytics for trade promotions and how CPG Data Analytics can drastically increase promotion effectiveness.

Trade Promotion Optimization in the CPG Industry

Leverage advanced data analytics tools for your strategy

The latest advancements in technology and the massive data available allow executives and tech managers to harness the power of consumer data analytics to optimize their trade promotions. CPG Data Analytics represents a great opportunity for those companies smart enough to make the right investment choice and jump into digitalization.

Adopting a data-driven approach to TPO means leveraging AI tools and data science for predictive analytics, scenario planning, and machine learning, all of which provide valuable CPG Data Insights and help generate optimized strategies.

How CPG Data Analytics enables predictive modeling

Machine learning is the golden goose of predictive modeling. Machine learning algorithms run different scenarios to measure how a trade promotion strategy would perform under other conditions and its impact on:

  • Sales volume
  • Revenue and profit
  • Consumer satisfaction
  • Consumer acquisition

The CPG Data Insights generated enable businesses to pick the correct strategy, adjust it for optimization, and allocate budget most efficiently, ensuring better promotion effectiveness.

Take your targeting strategy to the next level

CPG Data Insights on your consumers are extremely valuable to better understand their needs, wants, habits, and purchase decisions. When conducting CPG Data Analysis, there are several types of data you have to consider:

  • Historical
  • Demographical
  • Geographical
  • From sales
  • Online sentiment

Moreover, all these data silos need to be centralized and readily accessible for every department inside the company to ensure everyone has a holistic view and exchange valuable data insights across all departments. Of course, this adds complexity to CPG Data Analysis, which must be overcome with a significant investment in advanced technology and customer analytics consulting.

Exploit CPG Data Analytics for personalization marketing

Precision marketing is considered very promising to maximize effectiveness in a world where consumers are overexposed to advertising and marketing messages.

A 2021 study published on Sustainable Operations and Computers showed that precision marketing scored higher than average when measuring its ability to catch attention and interest, elicit action, and repeat purchases.

Precision marketing is only possible when the company can access a huge database and perform advanced data analytics to gain consumer Insights. These insights are then used to build a data-driven marketing strategy personalized on different consumer segments, each receiving a personalized and highly targeted marketing message on selected channels.

Data-driven pricing and promotion strategies 

Pricing analytics play an important role when designing trade promotion strategies. Price elasticity, demand, consumer behavior, inflation, and competitors' pricing are all factors that must be considered when launching a new promotion.

Pricing analytics involves the analysis of market and consumer trends to uncover Insights. This translates into data-driven strategies that better respond to consumers' needs to drive growth (and profit).

Invest in powerful data integration

CPG Data Analytics requires, of course, a vast amount of data. We know that data comes from many varied sources and needs to be centralized to gain a holistic view of your trade promotion activities. Investing in data integration means bringing together the same place data from sales, marketing, supply chain, and customer support, facilitating CPG Data Analysis, and uncovering patterns and CPG Data Insights.

Companies like Tredence have proven experience in Data Integration from multiple sources with particular attention to:

  • Standardize data format
  • Identify and remove duplicate
  • Automate the system
  • Integrate data with eventual platforms used by clients.

Use CPG Analytics for test-and-learn

Test-and-learn approach, also known as "fail fast, fail often," is a set of agile practices to evaluate the effectiveness of strategies by conducting tests in small areas (or on target segments) to gather data and customer insights. The strength of test-and-learn lies in its ability to identify the correct strategy and adapt it to consumers' responses while minimizing risks, costs, and time.

And Google defined this approach as critical to any digital marketing transformation. 

Test-and-learn is one of the quickest ways to measure the effectiveness of your trade promotion strategy. You can conduct A/B tests and controlled experiments to determine what works best for your target audience and your specific market and optimize your trade promotion management accordingly. Testing uncovers CPG Data Insights otherwise very difficult, if not impossible, to gain.

Implement automated real-time monitoring

Once your trade promotion strategy is set up, you can maximize its effectiveness and catch all opportunities by constantly keeping it monitored. AI-powered data monitoring systems' ongoing promotion effectiveness automatically adjusts them according to market response to capitalize on emerging opportunities and identify underperforming promotions in real time.

AI-powered tools use data ingestion, transformation, visualization, annotation, and feedback to provide CPG Data Insights and solutions faster than traditional tools.

Improve your relationship with retailers

In today's scenario, establishing collaborative relationships with retailers is crucial for trade promotion optimization because it allows data and insights sharing. Effective and comprehensive CPG Data Analytics software gathers data and provides access to everyone involved, both on the manufacturer's and retailer's side. Relying on such software means that companies can finally align their objective with retailers, streamline information, and have access to point-of-sales and retailers' data, all to make more informed, data-driven solutions.

A stronger relationship with retailers enhances competitiveness and drives growth for all parties involved.

Streamline your processes to increase efficiency

Managing trade promotions can be complex and time-consuming when done manually without technology. Companies can streamline their processes by switching to automation and AI to improve efficiency and revenue growth management. There are many benefits of adopting a streamlined processes approach:

  • Drastically reduce human error
  • Accelerate processes
  • Share retail, CPG analytics, and CPG supply chain analytics
  • Have a clearer view of all trade promotions strategies in place 
  • Increase cost efficiency
  • Improve productivity
  • Make communication easier

Why CPG Data Analytics can do wonders for your trade promotion strategy

CPG Data Analytics Companies like Tredence work with advanced technology and data mining to provide the best TPO solutions for your business. To navigate in today's competitive and ever-changing scenario, companies need to be able to adapt since what has always been done before is no longer enough. And since trade promotions are one of the most important tools in every marketer's toolbox, it is clear that the ability to leverage the power of data to improve them means gaining a great competitive advantage.

In case you have found a mistake in the text, please send a message to the author by selecting the mistake and pressing Ctrl-Enter.
Allen 2
Joined: 1 year ago
Comments (0)

    No comments yet

You must be logged in to comment.

Sign In