Long before boxes of cereal or cookies land on the shelves at the local grocery store, manufacturers have spent significant sums on trade promotion management. The goal of these expenditures, which approach 14% of revenues according to some surveys,  is to influence retailer behavior. Specifically, trade promotions encourage retailers to take steps to increase sales of manufacturers’ products.

Trade promotions attempt to influence retailers to:

• Carry specific products
• Devote a set amount of shelf space/location to the products
• Set a specific price for the products

While manufacturers and retailers may be cutting some advertising budgets, manufacturers have a different plan when it comes to trade promotion spending in 2009 as revealed by a recent Consumer Goods poll:

• Decrease slightly over last year 33%
• Stay flat from last year 25%
• Increase more rapidly than previous years 20%
• Increase at the same pace as previous years 18%
• Decrease significantly from previous years 5%

The survey results indicate that firms are still willing to spend on trade promotion and they are also looking for systems to help them identify opportunities for improved efficiency and to measure return on investment. Share the results of this survey with your management consulting clients and develop a pitch to consumer goods manufacturers that allows them to increase sales along with trade promotion spending.

[Sources: Trade Promotion Management, Accenture, 2008; Trade Promotion Management, Consumer Goods Today, 5.1.2009]