Without actual spending data, is post-promotion analysis possible?

This question is often asked by people that are still using Excel to manage your promotions.  Without a TPM software solution, or TPM inside your EPR, you probably don’t have good historical spending data for your promotions.

Here’s the good news:  The answer is YES, but with limitations.  You may be able to perform two of the three types of evaluations for your trade promotions.

So, what are the three elements of evaluation post-promotion analysis?

  • Effective?  Did your promotion generate incremental volume?
  • Efficient?  Did your promotion generate incremental profit?
  • Why?  What happened at retail to influence and explain differences in effectiveness and efficiency ?

If you don't have accurate trade promotion spending by promotional event, you can't measure trade promotion efficiency.  The calculation for incremental profit requires that you know the cost of the promotion.   For more detail on promotion effectiveness and efficiency, go to our previous blog.

The good news is that you can still do some analysis on your trade promotions.

Effective:  You can use internal shipment data and movement data to determine if your promotion generated extra volume.   IRI, Nielsen and POS data will show results from a sell-through perspective.   If you can't afford or don't have access to syndicated data, you can use your own shipment data to analyze direct customers.  Be aware that your analysis of shipment data will need to account for potential diverting and forwarding-buying.  More about this in a future blog.

Why?  You can use in-store retail execution and other conditions to help answer why some promotions generate more volume than others.  Retail price, in-store signage, displays, shippers, secondary product locations, and feature ads can dramatically influence promotion effectiveness.

Realize that you can estimate promotional costs for future promotions.  Pro-forma P&Ls and analysis can use forecasted volume and spending to predict promotion efficiency.  However, you'll need actual promotional spending and results to perform true post-promotion analysis.

 

Alex Ring

President

CG Squared, Inc.

 

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