Manufactures use their marketing funds for promotions execution in collaboration with retailers. The process of planning a promotion, analyzing it’s profitability, reviewing effect on sales & spending, and settling down the promotional allowance with retailer is a complex process. Good amount of money and time is spend towards the whole process working on Legacy applications like Excel sheet. Industry experts have recognized that having a Trade Promotion management application in place can widely influence the business, by improving the profitability of promotions and synchronizing planned volume with operations.
Fig. 1.1 Example of typical promotions Oracle Demantra’s solution for Trade promotions management needs is offered in module:
- Demantra Predictive Trade Planning (PTP)
->Option: Trade Promotion Management Optimizer (TPMO)
->Option: Deduction Settlement Management (DSM) (not covered in this discussion)
Trade Promotions management is carried out in top-down fashion on Financial budgeting part & bottom-top approach on promotions planning part. It involves various activities which are readily supported by Oracle Demantra’s PTP module.What Demantra Offers specially to Promotions Planning arena:
- Manage all promotions, accounts, trade spending collaboratively
- Generate separate Incremental Forecast broken down to Lift, Cannibalization, and Pre/Post effects.
- Simulate & Optimize promotions in a sandbox environment
- Integrated with Seibel & JD Edwards application
Quotas & Fund Management:
Funds are allocated to promotions and are allocated downwards. Demantra gives you a standard set of promotion funds like, Brand Development fund, Market Development Fund and Slotting Funds. Senior management enters base rate, development rate and fixed rates for BDFs & MDFs, they also key in Quota details in the system.
Demantra provides seeded worksheet for Quotas & Fund Management, which involves providing entry sheets point for senior management and review sheets for sales reps. Sales reps can easily view funds available against their sales quota at detailed level of each brand and promotion group.
Volume Tracking:
Planned volume tracking can be done with ease, using Demantra worksheet with views to show base and incremental volume, historical shipments and current year plans. This empowers planners to monitor and track account volumes, which are finally communicated to Operations. Funds planning is an integral part of Volume tracking, as based on planned volume decisions are made on budgets and spending for allowances and deals.
Planning Promotions:
Newly created promotion has “Unplanned” status and has no impact on funds or forecast. Once this promotion’s status is changed to “Planned” for usage in forecasting, it impacts the system. Planned promotions cost is taken out from the available fund balance and Engine when run, generates baseline and lift for it. System also calculates measures like profit for manufacturer and retailers, fund balance etc. which are later used for Cost Benefit reviews.
After the review, you can approve the promotion and status changes to “Approved”. Next, once a firm agreement is reached between retailer and manufacturer, you change the status to “Committed”.
Committed promotions are recognized by a batch process and are reflected in projections.
After the execution of promotion and payment to retailer done, status is changed to “Paid” and later to “Closed.
Fig. 1.2 Promotion Life cycle: Status Changes
Promotion Planning Environment:
Promotion planning environment empowers you to analyze historical and new planned promotions. You can create new promotions, see their impact on sales, spending and profitability, while reviewing corresponding sales quota.
Demantra provides standard worksheets like “Planning Environment” & “Promotion Comparison”, which serves as the platform for various activities:
- Create new promotion
- Modify existing promotion
- Compare promotions
- Delete promotions
Activity browser in the worksheets gives you a visual of events calendar, showing events hierarchy and their planned execution period.
Promotion Optimization:
Planning environment worksheet offers optimization feature, using which you can optimize your planned promotions. You can select optimization rules from Maximizing Revenue, Maximizing Profit or Maximizing Units for getting an optimized promotion suggestion. After running optimization you can review the optimized promotions proposed in “Optimization Comparison” worksheet. Later, you can accept the optimization results, which will in turn copy the optimized promotion definition into the original promotion.
Next you change the promotion status to Planned, so that it can be used in your current plan.
Post Promotion Review:
Once the promotion is executed by the retailer and actual sales figure arrive, you can evaluate promotion’s effect. You can review the planned vs. actual for promotions using worksheet “Promotion Evaluation”. This worksheet has multiple views, Event Projection, Event Actuals, Projected sales vs. Actuals, Projected Profit vs. Actuals and Lift decomposition. Lift decomposition breaks down the Lift calculated by engine into promotional effects like cannibalization, pre and post effects.
This review helps you in evaluating the performance of the executed promotion and reveals true profitability of promotion.
Demantra also provides more detailed review worksheets for your past promotions, “Promotion Evaluation – Details” and “Scenario Evaluation”
Typical high level Promotion Flow in Demantra:
1. Load historical promotions
2. Run Engine in Promotion Effectiveness mode
3. Create new promotions in Demantra Promotion Planning environment
4. Run Simulation for newly created promotion
5. Analyze promotion details and it’s impact
6. Approve promotion
.............will be putting details of the promotions planning flow in upcoming blogs soon.
