Trade Investment Optimization
The client was an American dairy producer whose fresh, frozen and cultured dairy products are sold and promoted in major national retailers. In order to improve overall gross margin, the client sought to optimize its trade spend and achieve gains from elimination of inefficient investments. Our job was to optimize the client’s spend, identify savings opportunities, and to layout an implementation plan to improve annual gross margin.
ILLUMINATE
A database was built to capture historical spending. Analysis was conducted with the client team to understand unique business dynamics and identify the most accurate approach to spending evaluation. We reviewed category trends, competitive activity, brand level investments, and individual promotional events. The team developed multiple potential solutions as a starting point for testing against the realities of the business.
NAVIGATE
Potential solutions were tested in cooperation with the client’s team. The impact of spending changes was analyzed from multiple perspectives, to ensure the effect on overall volume was optimized. Further analysis was conducted as needed to fine tune the solutions. The team received validation of the findings from the sales organization, and alignment to the recommended action plans.
ACTIVATE
Four actions were taken to ensure the realization of this opportunity. First, two large product lines were decoupled from promotional events, leading to higher price point realization. Goals were set for each product category related to base pricing, and accountability for execution was set in place. The client moved legacy bill-back promotions to scan for efficiency. Finally, the trade planning process was improved so that sharing of best practices was comprehensive and impacted actual future promotional plans.
Results
This project resulted in gross margin improvement potential of greater than 5% of the existing trade investment.
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