This document discusses five ways that CPG manufacturers can stop leaking revenue to retailers. It notes that 10-30% of revenue is spent on trade promotions, 30% of sales forces' time is spent manually managing promotions, and 67% of marketing budgets are used for trade promotion spending. It then lists five tactics: 1) Change measures of promotion success from lift to profitability. 2) Innovate on promotion tactics rather than new products. 3) Adopt a culture open to change rather than resisting it. 4) Rationalize promotions to do fewer, less complex promotions. 5) Adopt centralized trade promotion management rather than manual tracking in Excel.

1. ATTENTION CPG MANUFACTURERS:
FIVE WAYS YOU CAN STOP LEAKING REVENUE TO RETAILERS
MEI Computer Technology Group Inc.

2. Webinar will start in 5 minutes
Superior Trade Promotion Management can
lead to a competitive advantage
Source: Infosys

3. Webinar will start in 4 minutes
10-30% of revenue spent on trade
promotions
Source: AMR Research, Forrester & TPMA

4. Webinar will start in 3 minutes
30%
of your sales force’s time is spent
manually managing trade
promotions
Source: Infosys

5. Webinar will start in 2 minutes
65%
of CPG Executives are feeling the
pressure from retailers to provide
insight and ideas to drive
incremental sales.
Source: AMR Research, Forrester & TPMA

6. Webinar will start in 1 minute
67% of the marketing budget is used
towards trade promotion spending
Source: Infosys

7. ATTENTION CPG MANUFACTURERS:
FIVE WAYS YOU CAN STOP LEAKING REVENUE TO RETAILERS
MEI Computer Technology Group Inc.

8. Presenter
Rob Bois
Director of Product Marketing
MEI Computer Technology Group
Moderator
Abby Chitester
Director of Marketing
MEI Computer Technology Group

9. Agenda
• Introductions
• Today’s Reality
• Technology & Processes
• TPM Performance Gaps
• Disciplined Approach
• Trade ROI
• Questions

10. Who is MEI?
Headquartered in
Established in 1983
Montreal, Canada
Client base is made up Over 40 Employees with
50 clients ranging from Offices throughout North
$30M to $3B in sales America
A leading developer of Offers a complete and proven
trade promotion solution that enables consumer
management software for packaged goods CPG
the Consumer Packaged companies to successfully plan,
Goods (CPG) industry execute and analyze all aspects
of the trade promotion
management cycle

11. The Growth of Store Brands
• 35% of shoppers are trying store brands for
the first time
• Store brands cost 1/3 less than national
brands
• Retailers are rationalizing down to one or two
national brands
• Consumers believe store brand quality is at
or near that of national brands

12. The New Shopper
• Moving to store brands • Millennials
• Stock outs = brand • Gen X
swap • Gen Y
• Less responsive to • Boomers
advertising
Less brand
Fragmented
loyal
Higher Cost
Expectations conscious
• Expects high quality • Cutting coupons
• Expects innovation • Shopping for deals
• Fickle • Highly price
sensitive

13. Rising Economy = Rising Costs
Fuel
Prices &
COGS
Retail
Price
Pressure

14. CPG’s Response:
• Buy down price
• Maintain share at any cost
• Push volume over profitability
• Shift dollars from advertising to trade

15. The Result
Tier 2 and 3
brands can’t
compete
Deductions &
Margins get
post-audits
eroded
increase
Retailers increase Promotion
pressure for trade measures get
dollars skewed
Trade spending
increases

16. The Tipping Point
• Now that costs are increasing at the same
time as trade, margins suffer
• Buying down price to retain volumes
becomes unprofitable
• Innovation suffers
• Trade spending gets out of control

17. Tactic #1 – Change Measures
• 74% of CPG companies still measure promotion
success by lift, and not profitability *
• Above the line and below the line tactics are
disconnected
• The true cost of volume and share is not known
• Track the true long-term effects of promotions
• Consider that market share goals may actually
erode margin goals
* CGT Trade Promotion Effectiveness Survey 11/09

18. Tactic #2 – Innovate on Promotions
• New product introductions are highly risky
and expensive
• Consumers expect innovation to come
from national brands
• Innovate on tactics, bundling, and cross-
channel promotions
• Give the perception of product innovation
without the costs

19. Tactic #3 – Adopt a Culture of Change
• CPG fears change therefore it rejects it
• Think of trade as joint value, not a cost of doing
business
• Encourage creativity with promotions
• Don’t settle for “we’ve always done it this way”

20. Tactic #4 – Promotion Rationalization
• Just because you did it last year doesn’t
mean you should do it this year
• Fewer less complex promotions could yield
similar or better results
• Shifts in the overall marketing mix could
produce significant results
− What if we shifted 20% from trade to online
advertising?
• Shifts in regional of even banner/store mix
can also pay large dividends

21. Tactic #5 – Adopt Centralized TPM
• Nearly 60% of CPG firms still track trade
through Excel
• Manual effort is staggering
• Central visibility is non-existent
• Metrics can’t be tracked
• History isn’t recorded
• Copy-paste becomes the de facto
promotion planning method

22. Trade Promotion Management
Headquarter Planning
Account Planning
Account Execution
Reconciliation
Post Promotional Analysis

23. Conclusion
• The status quo is potentially a road to disaster
• Only shifts in metrics will change behavior and
process
• Inability to track and mange trade centrally is
a show stopper
• Don’t fall victim of retailer “entitlement”

24. Q&A

25. Thank You
Rob Bois
617.418.1986
rbois@meicpg.com
www.meicpg.com