Trade promotion optimization: Analyze sales figures, past promotions, and competitor moves to run a promo that tops your profits

Imagine:

• accurately predicting how a promotion will impact sales before you launch it
• targeting the right customers with the right products to reach your next promo’s KPIs
• finding the perfect pricing sweet spot to drive maximum revenue increase

This level of accuracy and skill is often out of reach because traditional trade promotion methods are manual, fragmented, and rely on limited data. Yet, much of your untapped data can actually transform into powerful prediction tools.

Trade promotion optimization (TPO) unlocks this potential. By automating your processes and using all data your company generated up to this point, TPO solutions give you those predictive insights and strategic clarity:

TPO can be complex, often involving multiple tools. However, one solution (which we will talk about a bit later), developed with a decade of software experience in manufacturing and retail, makes it simple with a single, user-friendly platform.

Continue reading to:

• get answers to four key questions that illuminate the power of TPO, e.g., what are its real-life benefits (increase in net sales and no poor performing promotions, anyone?)
• see the one must-have for TPO software that ensures efficient work?
• explore how one TPO solution can help you transform your initial promotion management challenges into advantages
• discover a flowchart to help you select the right TPO tool for your business

Q1: What is trade promotion optimization? How it can help you make correct decisions about when, where, and how to run trade promotions

TPO is the strategic use of data, analytics, and forecasting to make trade promotions more efficient and profitable. It looks at both:

Consumer packaged goods (CPG) companies (like PepsiCo and Nestlé) can maximize the value of every dollar spent on trade promotions through TPO activities. TPO helps such companies achieve two major goals:

1. highlight which promotions would drive the highest sales and best ROI

2. avoid wasted spending on promotions that don’t align with customer or market trends

While TPO helps you design the best possible promotions, there’s another crucial piece of the puzzle: ensuring those promotions are smoothly managed.

Q2: Is there a difference between trade promotion management and optimization? Here’s why one can’t live without the other

TPO features are usually a part of a larger trade promotion management (TPM) tool.

Think of both activities like this:

• TPM is the engine. It handles the mechanics of setting up, running, and tracking/evaluating trade promotions.
• TPO is an intelligent navigator. It analyzes past data, predicts future outcomes, and helps steer your promotions towards maximum effectiveness.

In short, TPM manages the ‘how,’ and TPO focuses on the ‘why’ and ‘what if’ to optimize spend and bring the best promotion results. Combine them both, and your company will be among those that see transformative results —

→ increase in net sales
→ no poor performing promotions
→ improved forecasting

Let’s see more.

Q3: What are the benefits of trade promotion optimization? Latest research shows proven results

How about we skip the dry, generic advantages here?

Instead, let’s see what trade promotion results retail and manufacturing companies are getting from optimizing their trade promotion management in 2024. We took the fresh state of the industry report from the Promotion Optimization Institute (POI) who surveyed over 130 CPG companies. Below are the top savings and efficiencies those companies realized from trade promotion management and optimization:

Let’s briefly unpack these gains:

1. More sales from promotions that work. TPO analyzes past data to identify which specific promotion tactics (discounts, displays, etc.) actually increased sales, so you can focus investments on proven winners.
2. Avoiding poor performing promotions. Forecasting models in the TPO software highlights promotions that won’t likely deliver a good return, allowing you to stop them and reallocate budget elsewhere.
3. Improved sales forecasting. TPO uses machine learning, past data, and market trends to predict promotion demand and performance and quickly plan promotions.
4. Process improvements that cut manual work. The less time you spend struggling with spreadsheets and disorganized data, the more time you have to brainstorm promotional strategies.
5. Everyone sees the same picture. A single tool for trade promotion management and optimization gets your whole team using the same numbers, making decisions easier and faster.
6. Clear visibility of promotion hits and misses. Within the TPO software’s dashboards, you can quickly see which promotions are hits that should be expanded and which ones are misses that need to be adjusted.
7. Collaborative trade promotion planning that benefits both parties. Sharing data-backed promotion insights helps plan tactics that increase sales for your company while also driving foot traffic and revenue for retailers.
8. Returns on trade spend. TPO pinpoints the ideal budget distribution for trade promotion spending to generate the highest possible additional sales and profits.

Not all TPO software will deliver these benefits, though. Find out what works best in the next section.

Q4: What to look for in a trade promotion optimization software?

A trade promotion management software with TPO capabilities would be the best bet. Since these processes are closely connected, separating them across multiple tools would just eat up your money and time.

Once again, let’s set the dry and generic part aside. Instead, take a look at the key components of a real-life TPM/TPO system that has already delivered results.

We’ll use one of Yalantis’ recent projects for a US food manufacturer and retailer as an example. The result is a custom system that helps this partner manage and improve trade promotions. To deliver an efficient solution, the Yalantis team:

• performed extensive market research
• analyzed user feedback
• studied the requirements for effective promotion optimization
• consulted with industry experts
• conducted user testing and iterations

As a result, this system allows a food manufacturer and retailer to reduce costs, make profitable promotion decisions based on internal and external data, and avoid spreadsheet chaos.

Here are its main features:

• Data integration from multiple sources — the system collects inventory data from the client’s ERP, sales/operations data from Excel files, and competitive insights from third-party providers.
• Budget management with automation — pre-filled budgeting templates use historical data. It intelligently allocates budgets to maximize returns while automating processes to save time.
• Analytics and reporting made clear — sales dashboards show real-time sales metrics, trends, and promotion performance. Separate dashboards use artificial intelligence (AI) to analyze seasonal demand, pricing trends, and competition.
• Forecasting and ROI calculator — the system forecasts promotion success and returns using an ROI calculator, machine learning demand forecasting, and budget optimization engines.
• Scenario planning — the software enables fine-tuning promotions by location, product, and season to accurately adjust production volumes, pricing strategies, and inventory levels.
• Enablement through training — comprehensive support and training like demos and Q&As helped drive software adoption by manufacturing and retail teams resistant to new processes.
• Scalability for business growth — the flexible system can scale to handle the client’s expansion into new regions and onboarding of more employees.

So say you’ve got a tool for trade promotion management. Let’s stick to our approach of practical results and see how this tool can transform key TPM/TPO challenges into advantages.

Challenges trade promotion optimization solutions help you solve: An example of Yalantis Trade Navigator

Based on the custom TPM/TPO system project above, Yalantis has created a productized offering called Trade Navigator. Having delivered 5 customized solutions to CPG companies, we have an in-depth understanding of the key challenges companies face in this industry, and Trade Navigator is purposefully designed to help solve them.

TPO solutions like Yalantis Trade Navigator combine TPM and TPO capabilities into a unified platform. The Yalantis team can quickly customize it to unique business demands and help you transform initial challenges into advantages:

As such, you can avoid:

• too much manual work. Trade Navigator removes the need to manually enter and retrieve data in spreadsheets. It automatically collects all key sales and operations data in one place. The Yalantis team also handles all data-related tasks for setting up and running Trade Navigator: data extraction, cleaning, transforming — you know, all that “fun” data work. This frees up our clients to focus on more exciting tasks like hunting down the next big promotion idea.
• lack of external data analysis. For effective promotion optimization, companies need to analyze external factors beyond their own data — like competitor sales, market trends, and even weather impacts for seasonal products. Trade Navigator integrates both internal company data and external data sources (e.g., sales statistics across the country), providing a complete market view with the help of our data and analytics services.
• disconnected data. Having separate systems for promotions, sales, inventory and other data makes it hard to get a clear unified picture. Trade Navigator consolidates all this critical information into a single view.
• ineffective pricing strategies. Finding prices that boost revenue without offering huge discounts is tricky. Trade Navigator includes forecasting tools to predict demand during promotional periods. This helps plan production, inventory and logistics to optimally meet that demand.
• poor data quality. Recent research ranks data quality as the #1 goal in improving trade promotion efficiency, even over promotion planning. Why? Because high-quality data means high-quality analysis. As such, when customizing Trade Navigator to unique business needs, Yalantis data team cleans and integrates the client’s data to enhance its quality before feeding it into the tool.

If you’re ready to explore solutions, understanding the difference between ready-to-use and custom TPO software is essential. Discover a flowchart for navigating this decision in the next section.

Ready-to-use vs custom trade promotion optimization software: See this decision-making flowchart

Based on this flowchart, we can highlight the main benefits and limitations of ready-to-use and custom TPM/TPO solutions:

But of course, strengths and weaknesses of both solution types can leave you with sizable concerns, for example:

• With a generic solution, would you have to change your winning strategies just to fit the software?
• What if you spend a ton getting a ready-to-use solution workable, only to realize down the line that it still won’t do what you really need?
• Custom development can take months. Can you afford to wait that long when your competitors are already optimizing promotions?
• Custom solutions should be more flexible. But what level of customization does your business need?
• Your team may be too used to clunky spreadsheets. Is taking on a new system even worth it? Can you manage that long-term?

With this in mind, what if you could get the quick start of a ready-to-use platform while keeping the freedom to tailor it to your unique needs?

That’s what you can achieve with Yalantis Trade Navigator.

Once again, it’s a minimum viable product crafted by the Yalantis team, expert in both data and engineering solutions. This hybrid platform offers the benefits of both outsourced and SaaS models, bringing the best from each world.

Start with trade promotion optimization consulting and leave with a customized solution

Some facts for you to get familiar with Yalantis Trade Navigator:

• an accelerator Yalantis team can deploy for your which saves time and costs on development
• ensures that the customer retains ownership of the intellectual property forever, with stable minimum running costs (excluding infrastructure)
• can seamlessly integrate with both internal and external data sources
• can scale as your business and user base grows
• has a learning curve, with products demos and Q&A sessions

Want more details? Consult with our data experts for a quick but comprehensive demo. They will show you how Yalantis can tailor the Trade Navigator to your business needs.