Case Study: Promotional planning and evaluation in FMCG
One of the first projects that was undertaken using what was subsequently to become the Compas platform, was for Unilever UK. This was to build a system which allowed account managers to design and plan trade promotions, monitor them as they were running, and conduct detailed pre- and post-evaluation of their effectiveness and Return on Investment (ROI).
Running effective trade promotions is essential to success in today’s FMCG marketplace, accounting for around half of total marketing spend. The planning and evaluation of them therefore needs to be taken seriously, yet many businesses still use spreadsheets for this vital work. Our system (‘PROMIS’) provided them with all the functionality they needed to plan and evaluate their expenditure, as well as generating forecasts needed elsewhere in the business. With the ability to phase promotional sales over time and links to financial and other systems, the system reported expected weekly sales over a year in advance, including a complete profit and loss account from total sales down to gross profit.
Every weekend, as new sales and baseline information was loaded, the system recalculated the forecast sales for all planned promotions which were based on a fixed uplift or incremental volume, and recalculated a weekly profit and loss account, from individual promotion up to total company level. As well as inbound feeds from other systems, the tool also generated outputs to other systems, such as incremental sales volume and financial forecasts.
The detailed database of promotional information and actual sales volumes stretching back many years also created a huge source of competitive advantage by allowing evaluation of past promotional effectiveness to optimise future planning.
As was necessary before we developed the Compas platform, the system was hosted and managed internally by their own Oracle DBAs. Now, however, this functionality is available in a cost-effective manner to much smaller organisations, who have neither the resources nor the desire to manage such a system in-house. Amongst other features, the system provided the following important functionality:
- Combined multiple sources of data for planning/reporting (SAP, OFA, manual input)
- Export to SAP APO of promotional volumes
- Fixed volume, uplift factor or incremental volume promotional planning
- Phasing of promotional sales over the promotional window
- Scenario planning/what-if capabilities
- Handling of multiple on- and off-invoice pricing mechanisms
- Full P&L calculation from promotion up to total company level as soon as any changes are made
- Recalculation of remaining volumes for running promotions as actual sales are loaded
- Recalculation of planned incremental volumes for future campaigns on change of baseline
- Pre- and post-promotion calculation of effectiveness/ROI
- Powerful and flexible multi-dimensional reporting
- Analytical tools to explore promotional effectiveness at an aggregate level
- Handling of banded packs and on-pack gifts; ability to report on either banded packs or their constituents
- Full audit trail for changes to promotional details