This document discusses 5 key factors for companies to assess whether they are ready to optimize trade promotions. The 5 factors are: 1) being consumer-centric in trade promotion planning, 2) having effective promotion tactics, 3) measuring promotion success, 4) having an organizational culture receptive to change, and 5) demonstrating a strong return on investment from optimization. Adopting predictive trade analytics can help companies collaborate better with retailers, simulate promotion scenarios, and continually improve promotion performance.

1. Optimize
Trade
Promotions:
The Time is Right
5 Key Factors to
Know Your Company is Ready
a DemandTec eBook

2. TABLE OF CONTENTS
WHY NOW? 4
5 KEY FACTORS TO KNOW YOUR COMPANY IS READY 6
ONE: CONSUMER AND SHOPPER-CENTRICITY 7
TWO: TACTICS 8
THREE: MEASURING SUCCESS 10
FOUR: CULTURE 12
FIVE: ROI 13
ABOUT DEMANDTEC 14
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Optimize Trade Promotions

3. 5 Key Factors to
Know Your Company is Ready
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4. WHY NOW?
INFLATION IS BACK.
Food-at-home prices could rise about 4% in 2010, after a
mere 0.5% gain in 2009, the lowest annual rise since 1967,
says USDA. Shoppers will respond differently to trade promo-
tions as food costs heat up again. Trade Promotion Optimiza-
tion (TPO) can sharpen CPG promotion plans, pinpoint the
new pricing sweet spots that maximize event lift and brand
share—and help retailers build bigger baskets and profits,
stimulate categories, and retain more of the targeted shopper
segments they value most.
Trade event planning is more refined—the ability to simulate
events and forecast results accurately creates the truest win-
ners in trade promotions. Best practice is no longer a direct
build off of the prior year—because alternate brand and
private label competition is fiercer, and retailer performance
demands are greater. For example: Costco expects store
brands will generate 37% of dollar sales by August 2012, up
ten percentage points from 2010; at Kroger, store brands were
35% of unit sales and about 26% of dollar sales in the lat-
est fiscal quarter. To help fend off SKU rationalization, brands
need to excel in trade promotion performance measures.
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Optimize Trade Promotions

5. CPG leaders already use TPO to collaborate more closely with
retailers. This capability (also known as predictive trade analyt-
ics) enables CPG to simulate ‘what if’ scenarios to optimize
event plans and align with retailers’ strategic objectives and
go-to-market strategies. This shifts the partnering focus to
how the CPG brand/item portfolio can improve retailer cat-
egory performance.
“ WANT THE SAME PRISTINE, PROVEN,
TRANSPARENT AND FLEXIBLE PROCESS
TO ELEVATE YOUR COMPANY AND EN-
”
ABLE YOU TO COMPETE AT THEIR LEVEL?
First, consult our CPG Checklist: 5 critical points of self-
assessment that show your readiness to gain competitive
advantage through more intelligent trade.
5

6. 5
KEY FACTORS
TO KNOW YOUR
COMPANY IS READY
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Optimize Trade Promotions

7. 1. CONSUMER- AND SHOPPER-CENTRICITY
The chief household shopper goes to the store with needs and
wants of multiple family members in mind—and a necessities-
only budget. How central are your brands and trade events to
purchase triggers? Do your event plans tailor your national
platform (based on your brands’ consumer insights) to retailer
objectives to grow specific shopper segments important to
their stores?
How crisply do your messaging, promotion pricing and pur-
chase incentives at the shelf resonate with targeted shoppers?
Do key chains share frequent cardholder trend data for
detailed shopper-centric simulations, which in turn show
events lifting categories and satisfying shoppers? Using
TPO to simulate events in the planning stage abates risk,
aligns with demand, lessens risk and grows compliance.
Consumers are settling into a new frugality. Find
the right promotional pricing for your brands,
market-by-market, by also asking: Has
their purchase hierarchy (market struc-
ture) changed in order to save money?
What is their receptivity to value brands
or private label in your categories? Do
they perceive your brands within the
competitive set of national leaders, or
vs. private label?
7

8. 2. TACTICS
Are you like most CPG companies lacking processes and sys-
tems to track causal data such as in-store display compliance
and ad features? Is that a big blind spot that hinders analysis
of item-level price elasticity—and the event tactics that would
work best?
Are trading partners accountable for execution in your tactical
processes? Does your company regularly secure and docu-
ment event compliance? How often do you get the endcaps,
feature displays, signage and circular space you pay retail-
ers for in good faith? Is your company simplifying tactics to
reduce unnecessary complexity and enhance the likelihood of
compliance?
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Optimize Trade Promotions

9. “ DO YOU TEST DIFFERENT
TACTICAL EXECUTIONS TO
HELP PLANNED EVENTS
”
REACH FULL POTENTIAL?
Anything less than excellent tactical execution compromises
event results, often without being tagged as the reason; this in
turn can incorrectly skew future plans.
Do you test different tactical executions to help planned
events reach full potential? Do you leverage all available
resources such as mobile technology in the field, sales and
marketing agencies, better-trained DSD teams or store-based
workers?
Is your company preparing for the coming era of more ‘pay on
scan,’ which will allow CPG teams greater field presence in
stores because they will still own the goods on the shelves?
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10. 3. MEASURING SUCCESS
How often do you establish quantifiable success measures
from the outset with retailers?
Key Performance Indicators (KPIs) push partners to work
cohesively towards goals, which go beyond dollars to posi-
tion stores as motivated to deliver savings and healthy eating
options. Do your KPIs address this: ‘Are we doing enough to
escalate the performance of our retailers’ categories? Are we
improving faster than our competitors to satisfy consumers
and shoppers?’
“ ARE WE IMPROVING FASTER
THAN OUR COMPETITORS TO
SATISFY CONSUMERS AND
”
SHOPPERS?
Should events stay on your calendar or not? Trade Promotion
Optimization, or predictive trade analytics, gives the critical
insights to these important questions: Are we gaining or los-
ing market share? Are we running more or fewer trade events
this year than last? Is event lift better or worse? Are sales/
profits/profit margins rising for every dollar we spend on trade
events? Are we selling more cases for every dollar we spend
on trade events?
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Optimize Trade Promotions

11. Also: Is shelf space increasing or decreasing? Are more dis-
counts being passed through to shoppers? Are events involv-
ing more of our branded items, or others cross-merchandised
(PL or other brands that go with the concepts)? Are our events
engaging more or fewer shoppers at the chains we collaborate
with? Is our brand equity rising among targeted consumers?
Are we hearing more positive or negative feedback from our
retail partners? Trends in category/brand/item performance,
trip frequency, basket size, companion purchases at key
chains we collaborate with?
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12. 4. CULTURE
Don’t underestimate the human side of adopting predic-
tive trade analytics and effecting organizational change. The
process begins when a CPG company assesses readiness,
and then deepens as business processes are realigned, new
capabilities are acquired, and users fully adopt the software
solution. This ‘human track’ unfolds over months in tandem
with the TPO ramp-up.
Best: Senior leadership communicates their vision of the future
state throughout the adoption process, and relies on a cross-
functional team of power users (Trade Strategy, Brands, Sales
Management and more) to tell early success stories that excite
the CPG organization.
How ready is your CPG company to get underway with predic-
tive trade analytics? Answer bluntly: Do our senior executives
know how retailers require event gains year over year? Are we
willing to invest in the technology to achieve this? Do we have
the vision to embrace positive change across multiple disci-
plines – marketing, finance, sales, brands, and logistics?
Also: Do we know who our power users would be? Would
we empower team members to serve retail accounts better?
Do we have goals/timelines in place for customer teams and
headquarters adoption? Do we know how to leverage these
new capabilities to launch new products and other initiatives?
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Optimize Trade Promotions

13. 5. ROI
Retailers were early adopters of Software-as-a-Service models
to manage price, promotion and assortment activities, so CPG
needs to master these same elements, using TPO to shape
demand. They’ll be seen as more credible, customer-centric
partners.
The ROI on such a solution will grow with repeated use. Closer
retail collaborations will lead to better-targeted event plans,
and cross-functional views into better results. As event perfor-
mance rises, CPG will better shield its brands’ everyday shelf
space from SKU rationalization.
These gains will cycle faster if a CPG company chooses the
right technology provider. When evaluating a potential source,
ask: Is the solution complete? Does it include the ability to
manage data? Do we believe in its scientific modeling? Is it
delivered as Software-as-a-Service, or does it require use of
our servers and IT involvement? What is the provider’s record
on delivery excellence? Are there meaningful benefits mea-
surements? Are user-support processes robust enough for
our needs? Are there enough persuasive customer testimoni-
als? Can we structure an agreement/commitment to suit our
company’s growth plans, objectives and scalability?
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14. ABOUT
DEMANDTEC
DemandTec (NASDAQ: DMAN) enables retailers and consumer
products companies to optimize merchandising and marketing
decisions, individually or collaboratively, to achieve their sales
volume, revenue and profitability objectives. DemandTec
software services utilize DemandTec’s science-based software
platform to model and understand consumer behavior.
DemandTec customers include more than 195 leading retailers
and consumer products manufacturers, such as Ahold
USA, Best Buy, ConAgra Foods, Delhaize America, General
Mills, H-E-B Grocery Co., The Home Depot, Hormel Foods,
Monoprix, PETCO, Safeway, Sara Lee, Walmart and WH
Smith. Connected via the DemandTec TradePoint Network™,
DemandTec customers have collaborated online with more
than 3 million trade deals.
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Optimize Trade Promotions

15. CONTACT US
DemandTec
One Franklin Parkway
Building 910
San Mateo, CA 94403
USA
INQUIRIES
Phone: +1.650.645.7100
Please visit www.demandtec.com
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