Implementing promotions can significantly leverage revenue gains and increase brand exposure for FMCG businesses, both instore and online. It is important to avoid ineffective promotions through employing a set of guidelines that ensure value for both the manufacturer and the customer.
If promotional guidelines are already in place, question whether they are implementable, unrestrictive to KAMs and aligned to business goals.
Ok, how do we start?
First, you need to get the right people together in a room with access to promotional analytics and insights. Guidelines should be aligned to marketing strategy, support the company’s financial targets, be realistic and easy to negotiate with customers. From our experience, the most effective guidelines are created through the collaboration between sales, marketing, and revenue management teams.
How do we align it to our business goals?
For every product group in your portfolio, it’s important to have clarity of their pack roles and what the expected gains from promotions are.
Defining the pack role helps teams understand how frequently promotions should be run. For example, it may be advisable to promote premium packs only twice a year but run more frequent promotions on entry packs to attract new consumers.
Secondly, it’s important to understanding the product’s promo role to ensure that the right promotions are being run to meet your revenue and profit targets.
How do we make it easy to implement?
Once you understand the pack and promo roles of your products, you are in a good position to start designing the promotional guidelines that KAMs can negotiate and implement with customers.
Guidelines should be simple and easy to follow; they must be specific but should allow some flexibility during negotiations for KAMs. Examples include:
Seasonal specific guidelines
Discount range to work within (e.g. 20%-30% discount)
Guidelines based on incremental profit or revenue
Marketing or secondary display guidelines
Finally, make sure the right tools and processes are in place to increase the efficiency and speed of the approvals process for each promotion.
With the retail market constantly changing across Europe and APAC, promotional guidelines should be reviewed and updated regularly. Investing in the right tools and using the insights from historic promotions will help you better forecast consumer response and the impact on your P&L. This will ensure that the guidelines are relevant and aligned to your business goals.