Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Intro to Trade Promotion Optimization

613 views

Published on

Afs tpo 2016 user conf

Published in: Business
  • Be the first to comment

Intro to Trade Promotion Optimization

  1. 1. Introducing Trade Promotion Optimization 2016 AFS User Conference
  2. 2. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Alex Ring, VP TPM Product Management Retail & Foodservice Alex has 35 years’ experience creating and delivering TPM and TPO software and services to the retail and food service CPG industry. Alex was Founder and CEO of Synectics Group, which is now a part of AFS. Speaker(s)
  3. 3. ©2016 AFSTechnologies, Inc., Proprietary and Confidential 3 Agenda  TPM vs TPO  TPO Analogy  TPO Benefits  How TPO works  New AFS TPO version 2!  Questions
  4. 4. ©2016 AFSTechnologies, Inc., Proprietary and Confidential The process of managing all tactical day-to-day trade promotion activities. TPM covers the entire promotion’s life cycle, including forecasting, planning, budgeting, and settlements. TPM: Trade Promotion Management TPO: Trade Promotion Optimization The process of utilizing goals, constraints and predictive analytics to create better trade promotion strategies. Definitions: TPO vs TPM
  5. 5. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Analogy Adding TPO to TPM is like Adding Google turn-by-turn Directions to a map
  6. 6. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Map TPM You already know where you want to go, and you know how to map your route. Use the map to create your own route. You already know the specific promotions you want to create. Enter promotions in the TPM solution. Google Directions TPO Give Google start and end locations, and let Google give you turn-by-turn directions. The route is optimized for speed or distance and accounts for traffic and tolls. Over-ride the route as needed. Give TPO your goals and constraints, and let TPO show you possible trade calendars. The calendar is optimized for revenue, volume or profit and stays within constraints. Use TPO to improve your trade strategy for your top volume customers. Expectations
  7. 7. ©2016 AFSTechnologies, Inc., Proprietary and Confidential TPM TPO Overall assumption You want help know what promotions you want to run You want TPO to show you potential trade calendars How to use the tool Enter only the specific promotions that will be executed at retail Enter the budget, business rules, and ALL of the potential promotion options Challenges Creating scenarios can be time consuming, with trial-and-error approach. Only as good as the promotions you create. Stake holders must be willing to invest time into TPO and open to changing the trade strategy. What’s the goal? Manage all aspects of the trade promotion life cycle for all products and customers, from beginning to end. Create better trade strategies for customers and brand/products that materially affect your business. (80/20 rule) Benefits Transactional efficiencies, work-flow controls, and financial reporting of incurred and net liability Determine what trade strategy maximizes your goals (profit, revenue and/or volume) while staying within all your business constraints. Adding TPO to TPM
  8. 8. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Opportunity cost of only using TPM Top 10 customers: typically 60% to 80% of your sales, trade budget and profitability Maintain sales and reduce spending as a percentage of sales Value Annual Trade Spending on top 10 $20,000,000 Conservative % improvement 5.00% Conservative payback opportunity $1,000,000 Aggressive % improvement 10.00% Aggressive payback opportunity $2,000,000 Hold spending constant and increase dollar sales Value Annual Dollar Sales of Top 10 $100,000,000 Estimated Gross profit margin 35% Conservative % increase in sales 2.00% Conservative payback opportunity $700,000 Aggressive % increase in sales 4.00% Aggressive payback opportunity $1,400,000
  9. 9. ©2016 AFSTechnologies, Inc., Proprietary and Confidential 5. Strategic learning & calendar used in TPM 1. Load Corporate targets and guidelines 2. Customer Planning With Optimization 3. Customer Plan Work-flow 4. Incremental Fund Analysis & Approval How TPO works
  10. 10. ©2016 AFSTechnologies, Inc., Proprietary and Confidential What is the expected impact on volume if we run a 4 week $3.29 TPR? … a 1 week $2.99 Ad & Display? Price Reduction VolumeLift Feature & Display Display Only Feature Only TPR Only Integration to Predictive Analytics
  11. 11. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Business Impact Feature & Display Feature Only Display Only Which combination of events will have the greatest impact on volume? … on revenue and profit? AFS TPO Enable Balanced Decision Making Focus on highest value opportunities; start small, law of diminishing returns
  12. 12. ©2016 AFSTechnologies, Inc., Proprietary and Confidential TPM Solution TPO: Strategy TPM: Tactics • Fewer details • Easy What-if • Macro changes • Very specific • Financial record • Micro changes AFS TPO TPO vs. TPM
  13. 13. ©2016 AFSTechnologies, Inc., Proprietary and Confidential AFS TPO Dashboard: What-if Plans vs. Budget
  14. 14. ©2016 AFSTechnologies, Inc., Proprietary and Confidential AFS TPO Dashboard: View all your What-if events
  15. 15. ©2016 AFSTechnologies, Inc., Proprietary and Confidential What-if Event Planning
  16. 16. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Learn from history
  17. 17. ©2016 AFSTechnologies, Inc., Proprietary and Confidential OPTIMIZE FOR PROFIT, REVENUE, AND/OR VOLUME! AFS TPO actually builds the optimized deal calendar!
  18. 18. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Manage Incremental Fund Requests
  19. 19. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Business Rules Include:  Always Promote Together  Do Not Promote Together  Seasonality Windows  EDLP Or Non-promoted Base  Green : Preferred weeks  Red X: Don’t promote weeks  Pre-gap and post-gap minimums  Forward-buy effects AFS TPO Planner builds the Optimized calendar
  20. 20. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Example: Scenario Detail with five separate report tabs Report views in Excel
  21. 21. ©2016 AFSTechnologies, Inc., Proprietary and Confidential Thank you Q & A Next Session: After the break, A Space Odyssey, in the Grand Saguaro North

×