BrainTrust Query: P-O-Inted Observations on Collaborative Promotion Optimization
Through a special arrangement, presented here for discussion is a summary of a current article from Getting Personal About Business, the blog of Zahn Consulting, LLC.
"This is hard stuff!," Dr. John Stanton, professor of Food Marketing at St. Joseph’s University animatedly admitted in a keynote address starting off the 4th annual POI (Promotion Optimization Institute) Joint Business Planning Summit held in Chicago in early November.
"We are all self-interested parties with our own objectives, metrics, tools, and evaluation criteria," he continued. "So what works for sales may conflict with marketing; what operations values differ from IT, what sellers pursue may be in contrast to what buyers or procurement seeks; and shoppers are often forgotten in the discussions held between retailers and manufacturers."
With the theme of promotion collaboration established, the conference attendees debated many of the hurdles facing such partnering while also hearing examples of progress:
- Pam Brown, director of trade promotions, Del Monte Foods, discussed how her company approached its three-year journey to move up the ladder from Trade Promotion Management (TPM) to Trade Promotion Optimization (TPO). In advice also heard from other presenters, Ms. Brown stressed the importance of establishing clear goals, securing senior executive backing, and creating the training and support necessary for people to harness the power of the tools and processes to improve their performance.
- Trevor Barrett, SAP CC Lead at Premier Foods, discussed how his firm was able to migrate to a unified TPO system across numerous customers (retailers), categories, countries and acquisitions of brands, each with their own nuanced way of doing business. The complexity of being able to retain a consistency of approach was facilitated by a reliance on SAP applications that allowed Premier to track, manage, monitor and correct trade performance across categories.
- Kevin Kroymann, national trade marketing manager at Hormel Foods, detailed how Hormel’s success against bigger competitors was in large measure the result of the ability to collaborate more effectively with retailers based on more skillful use of insights, trade promotion analytic capabilities and fluid communication.
- Steve Jankauskas, VP of business development for Annie’s Inc., shared examples of how Annie’s has been able to collaborate with their retail partners to maintain or even raise prices based on the insights derived from the research on shopper price tolerances and the impact on purchase behaviors.
- Brian Fox, VP of category management at Ralcorp (formerly American Italian Pasta Company) discussed how the introduction of LEAN techniques allowed his company to go from inefficient spending due to poor forecasting, inventory management and poorly planned product launches to a company that retailers now rely on in developing strategies.
- P-O-Inted Observations on Collaborative Promotion Optimization – Zahn Consulting, LLC
- Promotion Optimization Institute
To what degree is collaboration between trade partners hampered by self-serving interests? Which emerging technologies (price, promotion, assortment, etc.) promise to particularly improve collaboration?