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This report sets out where the industry stands on TPM and Trade Promotion Optimization (TPO), and presents insights on how companies are moving from control and accountability of funds/payments (TPM) to optimizing trade promotion. TPO involves:
TPO Yields Important Benefits
Survey findings show that companies that have taken measurable steps in piloting/implementing TPO are:
Up to four times more likely to achieve and benefit from better promotional forecast accuracy
Up to seven times more likely to increase profitability
Although TPO is not widespread, the benefits that support implementing TPO are becoming clear. Companies willing to integrate their decision-making process completely (including culture, people, and technology) are beginning to improve their forecast accuracy and decrease trade spending as a percent of revenue. As a result of more effective promotions, over 60 percent of the surveyed companies that are implementing TPO have increased their profitability. Data, models and knowledge are available to optimize trade promotion, but TPO also requires an understanding, a plan, and a willingness to execute across Marketing, Sales, Finance, and Supply Chain operations.
A Collaborative Effort
This study is a result of a collaborative effort between the Promotion Optimization Institute (POI) and Accenture. POI's survey included over 60 leading North American and Global Consumer Packaged Goods (CPG) manufacturer, wholesaler, and retailer companies (with multiple respondents per company).
May 6, 2011
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