How to Ensure Compliant Trade Promotions

How to Ensure Compliant Trade Promotions

If you’re spending money on trade promotions with your retailer, here are the 6 metrics you need to monitor to improve promotional compliance.

As a Brand Manager, you are responsible for not only increasing brand value but also sales growth for your products. Trade promotions are a key strategy that you can use to help you achieve these goals. 

If executed correctly, trade promotions are effective in boosting sales and increasing brand awareness. Recent industry studies have concluded that a well run trade promotion can result in a lift in sales of up to 69%.

Whilst many Brand Managers are aware of the benefits of trade promotions, many struggle with ensuring promotional compliance. Execution is not easy, and Nielsen estimates that promotional compliance rates are on average 30% in retail; that’s not an impressive performance at the point-of-sale. 

This is a big problem, as it takes a lot of time and money to plan a promotion. On average it takes 3 months to get a promotion underway. It’s a waste to put in so much effort, only to see things fail on the execution side.

To ensure you are getting a return on investment on your trade promotions, you need to be hands-on in monitoring their execution. To help you with this, we have identified the 6 most important metrics to monitor to maximise promotional compliance.

1. Availability

Check your product’s availability by retailer, store format and geography.

If your product isn’t available on the shelf across stores, your trade promotions will fail. It seems obvious that on-shelf availability is critical. But Aglo has uncovered poor availability on shelf in promotion after promotion.

Check with your buyer for a list of high volume stores to follow up with during the promotion. Identify the stores with less shelf space and arrange extra inventory in the supply chain to avoid issues on the shelf.

Shelf with empty areas due to availability issues.

2. Facings

Be sure to negotiate additional product facings for your promotional campaign. Retailers typically allocate number of facings based on their perception of shopper demand.

During the promotional period, extra product facings are desirable as more units will sell during that specific time. If you don’t increase your number of facings during the promotional period, it may result in out-of-stocks on the shelf.

Negotiating extra product facings is hard, so it’s important to know which stores may have off-locations where extra facings can be allocated.

H2coco (red & green packs) with additional facings during promotion.

3. Assortment

Make sure the appropriate number of flavours or varieties is available during your trade promotions. If your product range has more than 5 SKUs, choose your top 3 SKUs to always be on display. Negotiate this in the promotion agreement with your retailer. 

If you don’t suggest the assortment strategy, the retailer will assort according to their their needs, not yours.

Assortment: Execute full range like Doritos Snacks.

4. Shelf Location

The location of your product is a fundamental influencer on your sales. For obvious reasons, eye level is the most desired and expensive location on the shelf.

Track compliance of this metric against your retailer agreement.

Try to spot the brands on the top shelf. Not easy!

5. Pricing

One of the most effective strategies for trade promotions is price discounts. 

When you discount a product, you want your customers to know about it.

Check to make sure the correct price tag is displayed during your promotion. It sounds simple, but we have discovered many brands missing the promotional discount price tag on the shelf. Remember that the price discount is one of the most important drivers of sales during your trade promotion.

Avoid shopper confusion, make sure the correct price tag is displayed.

6. POS Material

The level of POS compliance on the shelf will determine the likelihood of your promotion performing well. It’s a good practice to share with the retailer the promotional POS artwork before the promotional period; their approval is important and avoids future problems.

POS material (floor decal) - get approval from your retailer to execute.

Start improving your promotional compliance

In summary, these are the 6 metrics to watch before and during trade promotions. Start putting measures in place for your next campaign. 

Tracking these metrics will give you an objective view of how your campaign actually performed. And sharing these metrics with your retailer during the post-campaign review will result in a more collaborative, fact-driven discussion.

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