Your report and leader on the Office of Fair Trading (OFT) investigation into supermarket practices (MW last week) made one thing very clear: trade investments in one form or another are here to stay. Suppliers are reconciled to this fact; the question for them is how to ensure that they achieve the best return on investment.
For packaged goods manufacturers, trade promotions now represent a major area of expenditure – as much as 25 per cent of sales revenue. Despite this, most have not implemented strategies to control trade promotions effectively. Unsurprising, then, that the majority of such promotions are recognised to be unprofitable.
It does not have to be this way: manufacturers that implement trade promotions management systems are able to plan, manage and evaluate all aspects of their trade promotions. This means that they can not only reduce costs and increase sales volumes, they can also be sure that these investments will be profitable. In fact, they rightly become as enthusiastic about trade promotions as their retail customers.