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Consumer packaged goods (CPG) companies have invested heavily in technology platforms to improve their trade promotion performance but many lack the talent or business processes to capitalize on these investments, a new study from Accenture (NYSE: ACN) finds.
According to Accenture’s Perfect Promotion Study, based on interviews with 350 senior executives at large CPG companies, 61 percent believe their technology investments have produced a wealth of data that can help improve their trade promotion performance but they lack the talent needed to put the data to its most effective use and boost the
return on their analytics investment. In fact, one in five executives – 21 percent – admit that they trust their intuition more than the available data to make trade promotion-related decisions.
The study also reveals that CPG companies have changed their trade promotion investments since the start of the economic downturn in 2008. According to the study, 71 percent of CPG companies have increased their trade promotion spending in response to the economic downturn - 23 percent by more than one. Many executives participating in the study believe the additional investment has delivered additional value: 27 percent believe their return on investment (ROI) has increased by more than a quarter since the downturn, while 16 percent believe that their ROI has declined.
Slightly more than half – 53 percent – believe their company’s trade promotion performance is good, but could be improved. However, 28 percent believe it to be either “totally ineffective” or in need of significant improvement, and only 19 percent view their trade promotion performance as industry leading.
“The right approach to trade promotions is to blend leading edge technology with outstanding talent and make better use of predictive analytics and greater process integration across the business,” said Ed Stark, a managing director in
Accenture’s Consumer Goods & Services practice. “In many cases the heroic efforts of individuals in CPG companies can hide many of the failings of their trade promotion efforts, and the successes that are achieved often occur in spite of, not because of, the tools, talent and processes at their disposal.”
“Our study indicates that most CPG companies are looking at the right areas in order to extract an improved return on their trade promotion investment. This holistic approach is the basis for
Accenture Perfect Promotion, designed to help clients increase their trade promotion volume and effectiveness with less investment.”
The volatile marketplace is reflected in the areas where CPG companies believe they can improve the ROI of their trade promotions. Two-thirds of the executives – 65 percent – identify the establishment of more cost effective processes as a key method of improving their trade promotions performance. Additionally, 57 percent say they prefer to contract for outsourced talent in the promotions area rather than hiring talent directly. And, 29 percent – indicate both a need for greater flexibility in terms of resourcing and a difficulty in attracting the right calibre of talent.