PepsiCo is one of the world’s leading food & beverage companies serving more than 200 countries around the world.
In FMCG, companies invest huge amounts in the growth of their business at their retail partners. Companies are seeking to better track and manage their trade investments to ensure that they are in line with the company or category objectives. Using trade promotion management as a strategic lever is one reason, increasing margins is a second. The potential is significant. TPM implementations which are successfully embedded in an organization yield ROI increases of 8%-15%, with a direct bottom-line impact of 4-30% on the operating profit.
PepsiCo asked us to to develop a trade promotion strategy for the food business in a very short time period.
By integrating various internal & external data sources in our trade promotion model, we developed insights in the effectiveness (volume growth, cannibalization effects...) and ROI of historical events.
In parallel, we assessed the strategic role of trade promotions within the marketing, category mangement & revenue growth agendas.
By making the strategic role of the different product ranges explicit, and creating sharp financial impact analyses, we were able to have insightful discussions with the different stakeholders (key account managers, higher management, category management...).
In the end we delivered clear guidelines on the optimal number and type of promotions per product segment, channel & retailer. We also handed over a simulation model to further measure and improve the financial impact, based on revenue, promotional trade spend and gross margin parameters.