The Empowered Consumer and Trade Promotion

Trade promotion execution is but one component of the Consumer Chain, albeit a very critical one indeed. So, in a recent conversation about trade promotion execution with the head of a corporate revenue management organization I asked the question: “Where does the consumer fit in all that?” After a short delay, he answered, “Nowhere really – TPM is essentially a deal between us and the retailer.”

Hmmm.

OK, then; a deal to do what? Fund promotions, right? You know, those tactical actions that are designed to attract the interest of the, uh, consumer, right? “Yes, I get you,” he says; “But our role is to offer financial support that ultimately drives incremental revenues. We have to move product, so that’s more B2B than B2C.” Well, when you start with the acronyms, you must be careful not to get too black and white. I believe most of you reading this will agree that, if you want to go the acronym route, it’s really B2B2C, with that good ol’ consumer as the final target, the overarching objective.

He goes on: “We move product into the channel, into the DC’s and ultimately to the store. I get that the point is to drive the shopper into the store, but that role belongs to the retailer. Our sales guys strike a deal that gets them the volume and the lowest incremental cost. In fact, that is what our promotion optimization tool is designed to do – calculate the best deal for us.” Well, he’s right about that. Most promotion optimization tools are built to predict and model promotional tactics that best achieve the incremental volume of product or revenue.

So, I ask again, where is the consumer?

Not to keep picking on my revenue management guy here; but he also said that his marketing organization “owns the consumer.” Yep, they do. And when you consider what most companies are concentrating their digital transformation on these days, it is more often than not the reengineering of marketing, social and ecommerce systems that combine to help identify, engage and convert the omni-channel shopper to a fully loyal and faithful customer. The investment into marketing campaign software, consumer profile management tools, social media listening, sensitivity analyses solutions, and ecommerce engines is staggering compared to the same investment made in trade promotion. They are doing it because they know that the digital and mobile technology today touches (literally) every person who ever shops. They know that they can harvest their continually updated consumer profile and create promotions that drive straight at the heart of the desire or need of the consumer. Both the retailers and the corporate marketing organizations at the top CPG companies are working hard right now to figure out how they can increase the volume of contact; and guess what?  The very same suppliers that pay through the nose for trade promotion are beginning to funnel some of that money to the retailers’ direct marketing organizations instead of the category managers and buyers who deal with the trade promotion funds.

And yet, trade promotion execution still stands king of the hill in the budget for promotion. If the retail CFO and CEO begin to see that it is more cost effective to drive messages straight through the ether or mobile signal to the consumer 24/7/365 with the ability to monitor and measure the very minute they walk into the store and check out, why not hand the keys to the trade budget over to them?

Far-fetched?   Umm, don’t think so. Won’t happen? Did you bet against the Cubs last year?

Look, the truth is that the reformation of the business processes of consumer marketing we are calling the digital transformation will take some new forms that we may not be considering right now.   I have spoken to several people about the future of TPx lately; and since we are offering opportunities to participate in our Trade Promotion Execution Share Group, we are seeing a lot of interest in where we go next. So, it is on everyone’s mind right now; and that is a good thing.

Where is the consumer in trade promotion? Not very prominent, I am afraid. But leaving you with this question and answer should provoke some thought, should it not?  This is what we are all in it for, and never doubt that. There is work to be done yet.

I want to thank those of you who have responded to the invitations to the share groups, and I think we are going to have a great team of domain experts.   If you have not seen your invitation yet, let me know at rob.hand@supplychaininsights.com and let’s talk.  Our first meeting is July 24 – 26 in Dallas, so it’s coming up fast.

Rob Hand

Author Rob Hand

For most of my career, I have worked in four industries: Consumer Products, High Technology, Retail and Wholesale/Distribution. I was fortunate to begin my career with of one of the oldest channel promotion management companies in the world where I cut my teeth on the heart of consumer marketing around the business processes of co-op advertising, trade promotion and market development. Within consumer products, I covered all major sectors including fast moving consumer goods, fashion, DIY/Hardware, home furnishings, consumer electronics, retail telecom, oil & gas retail, automotive and beer/wine/spirits. I have formed and brought to successful outcomes three companies focused on these business processes and technology. I have worked with companies like Frito-Lay, Southwest Airlines, Intel, Hewlett-Packard, IBM, Nike, Sealy, Hanes, SABMiller, Anheuser-Busch and so many more – all of whom enabled me to build a strong cross-industry and cross-line of business viewpoint. I have guided the industry strategy and product management for companies like SAP and Oracle. Each of those companies gave me unique insights that have helped forge the way I look at every aspect of the consumer chain. My career has also provided me with a drive to be realistic in my analyses of observations and a pragmatic view of solutions. My parents blessed me with a penchant for hard work and an attitude that honesty is the always the best policy. I am a musician and a former NCAA football and basketball official; and I have a wonderful wife and children who continue to teach me something new every single day. I consider my opportunity with Lora Cecere and Supply Chain Insights as an excellent and inevitable channel to provide guidance, counsel and advice to a transforming group of industry leaders.

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