Demantra Shares Insights From CG Executive Trade Promotion Management Thought Leadership Dinner

Demantra, a provider of innovative trade promotion management, marketing analytics and supply chain planning solutions, today shared insights from its recent Consumer Goods Thought Leadership Dinner: Unifying Trade Promotions with Sales and Account Planning, which took place during the Consumer Goods Technology 2004 Fall Conference in Orlando.

At the dinner, experts from AMR Research, NAPAA and executives from leading consumer goods technology companies, including McCain Foods, Twentieth Century Fox, Schering-Plough, Heinz, Pharmavite, Pfizer, Georgia Pacific and Kellogg's, joined Demantra and industry visionary Rob Hand, of Hand Promotion Management, for a discussion on the subject of "Winning at the Shelf" and the integration of effective trade promotions with sales planning. The dinner provided an opportunity for consumer goods industry executives to share best practices and benchmark against their peers.

"This marked the second thought leadership dinner Demantra has created and hosted," said Meira Primes, senior director of global marketing for Demantra. "We're pleased that consumer goods (CG) leaders such as Heinz, Dunkin' Donuts, Kellogg's, McCain Foods, Georgia Pacific, VTech and Welch's have lent their participation and expertise to these two events to discuss real-life experiences implementing TPM solutions and the benefits they see for their organizations."

The primary issue for discussion during this dinner was the quest for understanding value and ROI for trade spending. While other topics such as deduction management and planning were also discussed, the table's centerpiece topic was analytics -- specifically, what to measure and how to measure it.

Each executive had their own concept of value, but when the question was asked about baselines and benchmarks, the group began to dissect the issue to determine how to establish and benchmark baselines in today's dynamic ever-changing market environment.

"A key take-away from our discussion was that benchmarking needed to be broken into a number of different and distinct indices, including an effective benchmark to measure sales lift, market introduction and market share, inventory management, program usage, trade spending and funding," commented Hand. "We had some lively discussion around what each of these indices meant to consumer goods companies and came to some interesting conclusions. It was a pleasure to be part of the dinner and I commend Demantra for assembling such a group of CG thought leaders."

Key Dinner Takeaways

Since there are so many variations of Sales Lift to consider, the group agreed it was the defined delta or incremental increase or decrease in the gross and net revenues generated within the confines of the promotional period or event. But one executive questioned how to set a baseline when a company has no history or when it wants to get into the market for the first time, which certainly presents challenges to a number of CG companies.

Many consumer goods companies have historic data that establishes key baselines for benchmarking market share, as well. The indices that are measured for determining how well positioned a company is on the bell curve of market share can be easily swayed by the environment and unscheduled actions of the competition. The group discussed, for instance, how Apple Computer hit a lull in the high tech boom just as they introduced iPod®. There were a number of MP3 players on the market already and the market was slowly growing. But Apple, as it often does, successfully forced the industry to accelerate as a result of its aggressive marketing, resulting in huge gains and changing the dynamics of the market branding itself -- forcing computer heavyweights like Dell to take on the product challenge.

An executive weighed in with another baseline benchmark -- Inventory Management. This executive commented that, since his company instituted a new Vendor Managed Inventory (VMI) tracking system, the organization has been cognizant of how poor inventory level planning has hurt them in their ability to gain higher lift.

He explained how his company has made this a sub-baseline measurement of sales lift because often they overlooked the inventory issue as one of the reasons for the company's lack of achievement of planned lift goals. Though a combination of direct promotional incentives to drive purchase and stocking and a carefully aligned consumer incentive and co-op fund support programs, this company was able to both push and pull the product through the channel. Another attendee questioned how the company actually derived the baseline for inventory management and learned that they employ a combination of historical bell curve formulae combined with a set of "judgments" against the forecast to create the new baseline.

Three other indices were offered by the consumer durables attendees. A key indicator they raised was Program Usage. This executive indicated that, along with other baselines mentioned above, their company set levels of support for each tier of channel customer. For instance, while they wanted 100 percent usage from their largest tier of resellers and distributors, they recognized they would get historically low usage from smaller companies in their consumer channels as well as those in their commercial channel. They knew exactly where that number is for each different type of promotion, period, environment and geography.