Excellence in Retail Trade Deal Collaboration: Three Perspectives
Excellent performance in planning and managing trade deals crosses three key dimensions: (1) Efficiency, (2) Effectiveness, and (3) Timeliness. A trade fund collaboration platform satisfies all three.
This three-part series examines how each dimension is essential in today’s era of promotion-sensitive shoppers.
Part 2: Effectiveness
Consumer demand science brings greater effectiveness to trade promotion
In the previous essay in this series, we discussed how grocery retailers collaborate on promotion trade funding with their entire vendor community, which encompasses brokers, distributors, and direct CPG suppliers. A collaboration platform makes the negotiation and implementation process highly efficient and accurate.
Process excellence at scale is only one of the important objectives for trading partners. Also of crucial importance is the ability to jointly plan promotions that truly deliver for both partners. A true, end-to-end promotion platform provides full transparency for all trading partners in deal collaboration. It also delivers more effective promotions by leveraging consumer demand science. This enables merchant and buyer communities to automatically evaluate the forecasted impact of any vendor deal and evaluate submitted offers based on the return on investment (ROI) to the retailer.
Automate forecasting
Any promotion investment decision must weigh the expected shopper response and its impact on sales and profits. With hundreds of vendors offers to consider in every planning cycle, retailers grapple with decision overload that calls for an analytic view and a systematic approach.
Automatically forecasting vendor trade offers allows merchants to quickly evaluate ranked promotions based on ROI or a combination of metrics which might related to basket size, margin, trade fund effectiveness or a dozen other relevant metrics. This capability provides the retailer with predicted outcomes to better evaluate and negotiate deals with their vendor partners, who also compete for promotional mindshare in the market.
Vendors need to present highly credible and compelling deals to their retail partners. Promotion forecasting provides the foundation for fact-based and goal-oriented discussions.
Two key principles apply here:
- Forecasting. Reliable automated forecasts help retailers scientifically evaluate deals and make it fast and easy to share the predicted metrics during collaboration with their vendor trading partners. Effective promotion planning must always consider the desired and expected outcomes.
- Scalability. Forecasted results should automatically consider versioning across divisions, categories or stores and not require any work on the part of the merchant or buyer – just a simple, quick evaluation – leading to better collaboration with the vendor community and a method to promote “better” while maximizing the value of the trade funds in play.
Access relevant metrics
To be effective, collaborative promotion planning must be an empirical process bounded by numbers that the retailer can trust.
Metrics should include category or item-level predicted sales volume, sales revenue, promotional lift, gross margin, retailer ROI calculations, cannibalization, and halo effects – while incorporating the value of the trade funds included in the vendor offer. Fact-based planning decisions require visibility of historical promotion performance at the item level and by historical vehicle. In addition, a view into competitor prices and item cost over time allows for deeper evaluations of competing vendor offers and internally generated promotions.
With so many data points to manage, manual processes frequently hinder an empirical approach to effective promotion planning. A self-service collaboration platform eliminates countless emails, spreadsheets, and error-prone processes that add time, raise costs, and constrain results.
Evaluate with confidence
The collaboration platform helps streamline retailers’ evaluations of the promotion terms and forecasts as they collaborate with their vendor community. This lets them determine whether the funding level for each promotion is optimized before accepting it. It also provides visibility into evaluating the impact of vendor promotions on private label brands or the category before finalizing a promotion plan.
Retailers make decisions with confidence that generated offers are most relevant to shoppers. Well-designed promotions are the “love language” retailers use to strengthen shopper loyalty.
What makes this work so well
DemandTec Collaboration is more than just a communications and data-sharing portal. It is tightly linked with Demandtec Promotion, so that vendor offers flow in automatically. In the process, the negotiation process is streamlined. Every deal is captured and tracked correctly so that no opportunity is missed.
When Collaboration is linked with Advanced Deal Management from DemandTec, users also enjoy centralized data management, customizable reporting, and data-driven decision-making that gives trading partners essential visibility and control over the promotion planning process.
Previously in this series: How retailer-vendor collaboration brings Efficiency to trade promotions.
Collaboration by DemandTec
Trade promotion collaboration by DemandTec is built to provide real-time trade funding negotiation for a faster, more efficient process. Move seamlessly from making the right deal to promotion planning to promotion execution.
- Ensure every deal is captured and tracked correctly
- Reduce third-party audit fees (up to 100%) annually
- Cut administration costs by 85%
