According to a new study commissioned by MEI Computer Technology Group Inc., there is an increased emphasis on improving trade promotion management effectiveness, as consumer packaged goods (CPG) manufacturers look to bolster the value and return on their trade spend, and capture wallet share from consumers. Despite the current climate, nearly half of all respondents (42%) said they will spend more on trade promotions in 2010, while only 8% said they would spend less. This represents a clear shift from last year as nearly the same number of CPG firms (38%) said they were planning to reduce their spend due to the unfavorable economy in 2009. View the findings from the study.

Retailers are also putting pressure on CPG firms, as they continue to take every possible deduction in order to maintain their profits. In fact, respondents were tied on what posed the biggest business challenge when dealing with retailers. Pressure to buy down price and retail execution/remaining in compliance to promotions were cited by nearly a third (31%) respectively, followed by pressure from store brands and SKU rationalization.

Trade promotions are a substantial and important strategy within CPG firms, yet cost and complexity often appear as barriers to change. To make the most of their trade investments and to better meet the needs of consumers and retailers alike, one third of consumer packaged goods companies said they would use packaged trade promotion management (TPM) software this year in order to improve business performance. According to the study, four out of five cited improving promotion effectiveness as the most important business imperative for adopting TPM (80%), followed by improving sales forecasting, gaining better visibility into spend and deductions, and predicting the effects of promotions.

"Trade Promotion software helps improve control across the organization by providing a centralized system for planning, executing, reconciling and analyzing trade promotions," said Lorne Schwartz, chief executive officer of MEI. "Today, the national brands are struggling to compete against store brands which often results in CPG firms having to either buy down price or risk being rationalized out of the category altogether. By leveraging TPM software, manufacturers can manage their business the way they want and make well-versed, critical decisions confidently, which results in improved profitability."


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