The impact on sales of an effective trade spending program can dwarf your other marketing efforts. The hard part is identifying what is effective and what isn’t, and quantifying that effectiveness so you can make good decisions about trade spending in the future. The right business software features can help.
This guide covers:
Retailers in the food industry have never had more bargaining power with their suppliers. Retail consolidation and the rise of behemoths like Walmart and Costco mean food producers aren’t just competing for mind space among consumers; they’re also competing for shelf space and retailer support, often in a zero-sum game against rivals in the same retail outlet or chain.
One of the most important tactical levers food companies can use to get a leg up is their trade spending (also called trade promotion). By spending money at the retail level, they influence customers right at the point of purchase, as well as influencing retailers to promote their product over the alternatives.
Effective trade spending is more important than ever before. It’s been a long time since food producers could afford to throw money at the problem while hoping for the best. Today’s retail environment is far too complicated and cutthroat for that.
A typical situation
Companies that fall behind when it comes to aggressively and effectively managing their trade spending suffer several typical symptoms:
Leading companies use specialized business software to help them attack these challenges in a variety of ways.
Maintaining accurate data
Bad data is like a wrong turn taken at the beginning of a long race. Regardless of how well you perform after that, you’re not going to end up where you hoped. Accurate data is your good start. It doesn’t guarantee success, but it is a prerequisite for it.
There are two keys to collecting and keeping accurate data:
Generating the right reports
As well as providing accurate real-time data to anyone who looks, the best software can also create data links with other programs like Excel. You can continue to use Excel for reporting and analysis, which is what Excel does best. The difference is that Excel will pull information directly from the centralized database, accuracy guaranteed. No manual data entry.
But that’s often just where the reporting capabilities start. Look for business software with built-in dashboards and reports so you can leave Excel for the heavy lifting. With the right metrics at your fingertips you’ll be able to respond to emerging trends with much more agility.
Evaluate the ROI
So far we’ve discussed how to maintain accurate trade spend data and generate quality reports from it without too much effort. All that is just to get us to the next step: analysis.
Making your trade spending more effective is all about making evidence-based decisions. The answers to the questions above, among others, are what you need to make those decisions. You don’t have time to call the person who looks after the files and then wait while they perform their analysis. And you don’t need to. Look for business software that makes it easy to get to the bottom of your performance ratios so you can keep doing what works and stop doing what doesn’t. Key to that is software that lets you tie expenses to your trade spend activities so you can fully account for their costs.
Plan and forecast
When you know what works and what doesn’t, you won’t just be more effective in the short term. It will also enable you to make better plans based on a more thorough understanding of the interrelationships among variables. You’ll also have a firmer basis on which to forecast the outcomes of your plans.
Don’t forget. If you want to make sure you’re doing more than buying market share with your trade spending, you need:
There are several business software solutions out there to help you manage your trade spend programs. Given what’s at stake, it pays to take a look at your own processes and ask if they’re really good enough for the intensity of competition you face.