Today, CPG companies face an unprecedented set of challenges in responding to the demands of investors to drive sales, margin, and cash flow growth simultaneously. Achieving this outcome requires a mindset shift both in what companies do and how they do it. Finding and capturing ‘Real Growth’ has become the universal challenge, and even where growth opportunities are identified, they can be challenged by the internal processes and investment hurdles that continually direct investment to traditional areas in the product and customer portfolio.
TPM/TPO solutions are helping organisations to transform how Sales and RGM teams can rapidly access actionable insights that drive better trade investment decisions within a customer, leveraging predictive algorithms to deliver guided decision making, scenario planning and simulation to drive better outcomes, promotional effectiveness and efficiency. Yet some of the untapped growth potential does not reside in traditional customers or product segments, and this raises an additional challenge about how to create pockets of investment to support growth in new places.
The process by which promotional investment budgets are defined and allocated to channels, customers or brands is one which is exposed to the traditional constraints and the ‘SALY’ plan (same as last year). The challenge itself is not new. There has always been a question about whether money is or isn’t spent in the right places to support the commercial ambition and goals. The importance of this question in the context of today’s commercial reality is however amplified and magnified as CPG companies are forced to re-evaluate where and how they can access real growth and what it will take to win. In an environment where the total trade investment fund is not getting bigger, the challenge is how can you accelerate investment that directly targets high-value growth opportunities without compromising core business and profitability. Today, both the data availability and technology have come of age to help business solve for this challenge in a data-led way.
Answering this question, creating pockets of investment to target high priority growth opportunities, and winning disproportionately, demands the application of predictive analytics, through algorithms, machine learning, and artificial intelligence (AI) to break the cycle of the SALY plan or a best-guess-approach to investment allocation. Organisations need a process and a solution that enables them to carve out trade investment to be targeted to priority growth strategies. One that can intelligently reallocate the remaining funds through an iterative and predictive model that leverages goal-seeking logic to ensure that core business is supported and protected whilst exploiting untapped growth opportunities at pace.
Our Trade Fund Optimiser solution enables CPG organisations to make these choices and investment decisions rapidly and at scale. We guide clients in the application of the insights from the solution and the adjustment to core business planning processes necessary to enable the mindset and behavioural shift that will allow them to exploit growth opportunities through strategic investment allocation.