While the news headlines are saying that grocery price inflation in the UK is easing for the fifth consecutive month, this outlook is slightly misleading. We remain in a high inflation environment, with high volatility in manufacturer’s input costs. It is important to bear this in mind as fast-moving consumer goods (FMCG) brands develop, deploy and evaluate their pricing and trade promotion strategies with retailers.

While both brands and retailers want to sustain sales velocity, they have different motivations, so they are approaching this from different angles. Especially in the lead-up to the festive season, retailers know that customers seeking value will be drawn into stores by competitive offers on branded products. For the brands themselves, though, it is a bit more complex. They must balance investment in display space and have the right offers while ensuring margins remain healthy.

Getting it right is paramount. According to the British Retail Consortium (BRC), retailers are facing a £470m-a-year rise in business rates, which will come into force in the new year. Streamlining operations to mitigate the impact of this rise will be at the forefront of their minds. At the same time, they need to create and execute promotions that resonate with price-conscious shoppers. However, the stats show there is still a disconnect. Manufacturers tend to spend 20-25% of net sales on trade spend on average, making it one of their biggest investments – yet many aren’t seeing the desired results and ROI.

Aligning the changing demands of consumers

Further complexity comes from consumers increasingly shopping around, often to the discounters or the supermarket with the best deals. In fact, 66% of consumers admit to switching brands to take full advantage of promotions. Promotions saturate the market, risking brands being trapped in a cycle of discounts and promotional sales, all while needing to maintain market share, build brand equity and attract new consumers.

The reason many brands get derailed in their discounting strategy stems from a lack of visibility of promotional performance. There’s a growing data minefield for FMCG brands, with more and more data that needs to be analysed against a backdrop of changing consumer attitudes and spending patterns. Whilst organisations recognise the benefit of building their data and analytics capabilities, investing in technology and data scientists alone is not enough to ensure success on this journey.

In contrast, the evaluation of promotions has historically been a manual process that is time-intensive and ineffective. There has been a reliance on individuals sifting through spreadsheets and other manually maintained sources of information rather than leveraging cutting-edge technology for deeper, real-time analysis.

The power of Trade Promotion Management tools

Thankfully, a growing number of FMCG companies recognise the potential of analytics. In response, they are adopting data hub or data lake architectures to unlock value. They understand that a comprehensive analytics solution that integrates various data sources is vastly more valuable than the individual disparate components.

This is where Trade Promotion Management (TPM) platforms can deliver real, tangible value. TPM solutions bring together all a brand’s data – from in-store activities to pricing, promotional plans to trade terms across products and customers and more. This data can be analysed as a whole, identifying proven trends and opportunities. Leaders can then make informed decisions, rather than basing strategic moves on ’gut-feeling’.

Best-in-class solutions seamlessly connect the business process with the available data creating an efficient way to analyse results. It’s for these reasons that the TPM market is expected to grow at  10.9% CAGR over the next five years.

Acumen’s Invest TPM solution uses historic and live data to predict the optimal trade spend and promotion mix to maximise return on investment. Users can collaborate across revenue management, sales, demand planning and finance teams to harness a single source of truth.

The unified platform automates time-consuming analysis while still allowing experienced team members to apply their market and customer knowledge. This balance of human insight and machine intelligence is powerful. For instance, Acumen’s Invest TPM platform helped Premier Foods integrate disparate data sets to get true visibility of ROI that helped them make better trade spend decisions. The platform has also been harnessed by brands, including Coca-Cola Hellenic, which has used advanced analytics to forecast what-if simulations to determine the best strategies.

Unlocking further benefits with Trade Promotion Management

Over the years, TPM software has continued to evolve beyond its traditional purpose of managing promotions and now offers comprehensive commercial planning, improved visibility and control, better ROI measurement and crucially, more time to unlock business growth. Organisations are increasingly seeking features like scenario planning, risk analysis, and baseline forecasting that all directly impact the P&L.

Beyond these primary benefits, however, TPM solutions deliver a full raft of additional benefits, allowing teams to:

• Unify data and analytics across the breadth of the organisations. This ensures teams can unlock improved collaboration between departments, better customer conversations and improved capability within sales teams.
• Streamline processes, to empower teams to focus on more strategic value-adding tasks and spend less time on repetitive admin tasks, helping them unlock new revenue streams and improving their job satisfaction.
• Access effective change management programmes, which prioritise unlocking value early, and reduce organisational barriers to successfully adopting TPM.

Through careful planning, clear communication, and a focus on tangible benefits, organisations can navigate the implementation process smoothly, ensuring that the transition to TPM is a positive one that unlocks value for the business.

After all, in today’s market, data is the new currency that is fuelling retailer-supplier relationships. It has never been more important to spend time interpreting customer, shopper and category data, rather than managing the data itself. By leveraging unified data and analytics, consumer brands can pursue pricing and promotional strategies that benefit both their business and customers, within today’s inflationary environment and long into the future.

Acumen is a revenue management consultancy and SaaS provider, helping consumer products companies make smarter, more profitable decisions through a combination of pricing, promotions, and mix management optimisation.