Throughout 2011, conversations about trade promotion management (TPM) often shifted toward the hotter topic of trade promotion optimization (TPO) and the stages in between. Here, Dale Hagemeyer, managing vice president, Industries Research, Manufacturing, Gartner Inc., discusses the state of these TPO initiatives in the CG industry, and offers guidance for companies of all sizes.
What trade promotion trends will impact the CG industry going forward?
Hagemeyer: There is tremendous interest in TPO. I believe it has huge upside for the industry. I also believe that as more data sets are used in optimization — like point-of-sale data — there could be better integration of this data for monitoring promotional compliance.
Has TPO become a major focus for most companies? Are these initiatives living up to the hype?
Hagemeyer: TPO is not yet a major focus, but like TPM before it, the focus is initially strong with Tier 1 companies. Many smaller companies are still switching from Excel or need to do so. TPO needs to build upon solid TPM business processes. But I do think that a POI/Accenture survey from earlier this year clearly demonstrated that TPO is delivering significant value.
If TPO is not the priority/end goal for some CG companies, what is?
Hagemeyer: The real priority is to improve promotional outcomes. It is a journey. TPM is a big component of that and TPO will be as well. But, the endgame is better promotions and that should be kept clearly in mind because it isn’t about the technology. It is about the business process.
Back to your earlier statement about Tier 1 versus smaller companies, is TPO appropriate for companies all of sizes?
Hagemeyer: It is appropriate for all. Every promotion spins off data. Having the right data and having it clean are critical to the TPO engines making better predictions. But even with sketchy and somewhat dirty data — that only improves accuracy from 50 percent to 65 percent — isn’t that still a benefit? Over time the TPO solutions have come down in price and complexity. It is just a matter of time before it will make sense for the broader market.
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