The Importance of Trade Promotion for Dairy

UpClear’s Feature in Dairy Foods Blog

UpClear’s Director of Customer Success, Americas, Rajeev Prabhakar was featured in Dairy Foods Magazine. Please see the blog below and the link to the article:

https://www.dairyfoods.com/blogs/14-dairy-foods-blog/post/95110-the-importance-of-trade-promotion-for-dairy

Leaders in the dairy industry are increasingly more aware of how competition has grown, with brands spending hundreds of millions of dollars for shopper loyalty. With a product that has a short shelf life, achieving the best value for trade spend is critical for a brand’s continued growth, gain in market share and profitability.

One of the key ways to determine the performance of different promotions across multiple retailers and points of sale is through an integrated revenue management software tool, creating consistent views of information across all departments involved. Leveraging a software as a service (SaaS) solution for major initiatives such as trade promotion management supports the need for brands to have the right agility, planning and operating model to make sure their products are in the right place, at the right time and for the right price.

Increased competition for new brands

Over the last decade, a number of new products have been introduced into the dairy category, increasing competition for shelf space, ads, displays, discounts and, ultimately, shoppers.

According to a Nielsen report, millennials are more likely than other demographics to gravitate to up-and-coming brands instead of established ones. Compared to baby boomers, for example, millennials are more than twice as likely (2.8 times) to believe newer brands are better or more innovative, and they are 3.7 times more likely to avoid buying from “big food.”

Studies reported that 42% of dairy consumers had tried a new brand in the past 12 months, and 48% of new brand purchasers buy both new and old brands. What this means for dairy brands is that an efficient and effective strategy when it comes to trade promotion is even more imperative.

How a SaaS solution helps make the most of your trade spend

One of the key recommendations that have been made to executives in the dairy industry, as well as to consumer goods professionals overall, is to invest in trade management solutions, especially with scale and efficiency in mind. SaaS is a key feature for brands that are scaling rapidly as it will typically have an easier implementation and is built to grow with the brand. This model, coupled with systems that provide transparency into data and predictive analytics to support demand planning, can reduce inefficiency and provide a common view across multiple teams.

Given that brands spend approximately 20% of their revenue on trade marketing, but only one-third of trade promotions are breaking even or are profitable, investing in trade systems is essential. In 2015, it was reported that eliminating 22% of trade promotions would increase net sales and profit.

An integrated tool and process that aligns all departments involved can keep the trade promotion strategy on course, across different go-to-market approaches. Automated trade systems can allow you to evaluate your investment in trial purchase promotions and identify which will provide the best return to achieve your growth goals.

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