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What are the Problems in Implementing Trade Promotion Optimization?


Although trade promotion Optimization costs a significant portion of organizational revenue, manufacturers face difficulty optimizing their promotion strategies to get maximum value for money.

Trade promotion is a two-step process: Trade Promotion Management (TPM) and Trade Promotion Optimization (TPO).

What is Trade Promotion Management?

TPM deals with the internal implementation and operation of trade promotions. That would constitute creating new promotions, allot funds for different departments at multiple stages, retail promotion management by inputting information into a software system, tracking the usage of promotional funds over time, demand planning, managing budgets, authorizing payments, back-end processes, etc.

 What is Trade Promotion Optimization?

Trade Promotion Optimization delivers proactive solutions to formulate lucrative and targeted promotions. The organizations can use these solutions to generate optimal price and promotion moves using tools like AssistEdge. 

TPO has five significant steps:

  1. Optimal Data: Various types of data viz., sales data, expenditures, related dates, performance factors, duration, etc., are collected from multiple sources. Organize data to obtain the results that can be further analyzed and converted into meaningful data for future use.
  2. Tracking: All the results obtained during each promotional event must be monitored and measured to understand requirements and set future goals.
  3. Derive Insights: After measuring the results from the organized data, analyze and implement. This strategic analysis can develop valuable insights. 
  4. Planning: Consider insights to plan an optimal promotional strategy for the future.
  5. Optimization: Implement a plan using a mathematical model to develop promotional schedules as the user’s multiple conditions users.

Problems in implementing Trade Promotion Optimization 

  1. Data availability challenge

Crucial data needs consideration before forming strategies to optimize trade promotions. Most CPG (Consumer Packaged Goods) companies depend on syndicated data brokers to obtain sales data. Retail Sales data is essential, but it isn’t sufficient to get a complete picture. Therefore, companies should also obtain data from POS (Point of Sale), past promotion data, search analytics, location, market research data, geographical data, etc.

  1.  Improper data formats

Planners still use custom spreadsheets to analyze promotional data. Manual entry into these spreadsheets is tiresome and time-consuming. They lack versatility and are error-prone. Using inadequate TPO tools and software cannot provide useful insights. Such methods complicate data harmonization and are challenging to implement in workflows.

  1. High dependency on skilled IT teams 

Companies cannot customize dashboards by themselves. Companies rely on skilled IT employees and data scientists to get the reports, develop new formats for insights, and update existing ones. It hinders the progress of decision-makers. 

Also, finding skilled personnel is difficult because of two reasons. First, they must be specialists in harmonizing diverse groups of datasets. Second, they should have a clear understanding of business issues to code them into datasets. Promotion tools need accurate data to function well. That is why companies lean on IT teams to get the optimal data.

  1.  Missing in-depth analysis 

Trade promotion strategies must be able to forecast and predict the impact of different promotion methods. They should analyze if buy one get one is better than giving a fifty per cent discount on the product, analyze if a free promotional gift can generate more sales, analyze if collaboration with other companies to sell a package of combined products is beneficial and several different scenarios. Many inadequate TPO tools fail to produce such in-depth analysis. 

  1.  Application of plans without concrete data insights

When companies lack the necessary data, have no skilled IT team to harmonize data, have no means of making accurate predictions, they can’t leverage data to make promotion decisions. Thus, companies make decisions based on partial knowledge, instincts, and a preliminary analysis of past experiences. Such guesswork and gut feelings cannot yield the same results as data-driven decisions. 

  1.  Focus on incorrect metrics

The volume is of lesser importance compared to profitability. Sales and marketing teams still focus on work instead of profitability. Every department in the company must focus on achieving profit. Unnecessary metrics can disrupt the analysis. 

  1. Erroneous post-promotion analysis 

Post-promotion analysis is a significant factor in the TPO system. Some companies fail to assess each trade promotion and recognize the low result and high result yielding promotions. These are undoubtedly common in cases when data compilation manual. Automation of this process can not only speed up the data harmonization but also makes it error-free. Decision-makers can implement profitable promotion plans. 

     8.  Not realizing the importance of TPO

Some Consumer Packaged Goods (CPG) companies are under the assumption that they don’t need a TPO when they have already implemented a TPM system. However, Companies must always implement TPO into their TPM approach to obtain the best results. TPM can only manage the active part of trade promotions, but TPO improves these plans.


Trade Promotion Optimization can incorporate, interpret, and share data. It analyzes Key Performance Indicators (KPIs) and improves profitability. TPO can harness the data and convert it into insights. It can arm planners with insights to determine forecasts and create maximum impact. It is crucial to adapt the technology and reap its benefits to have a competitive advantage. AssistEdge platform provided by EdgeVerve provides cutting edge technology solutions to implement Trade Promotion Optimization. We are excellent at data management, calculating harmonized metrics, and providing outstanding support across traditional and modern trade channels.