What sort of promotion pre/post evaluation is there?

22 Jun 09

Financial evaluation of every promotion at each stage in the cycle is paramount to the optimisation of trade funds. Maximising the return on investment from these trade funds can only be achieved by seeing what the effect is on the profitability for each promotion planned.

Each promotional event has its own financial statement that is at each step is true the life of a promotion. The financial summary shows the planner a comparison between normal sales and those during the promotion. This financial summary can be configured to match the financial criteria that is commonly used within the client’s specific environment.

Typically we would see a waterfall of trade spend components which might include;

• Gross Sales

• Discount

• Net Sales

• Volume

• Trade Spend

• Co-op

• Case Deal

• Terms

• Total Trade Spend

• Total Trade Spend Percentage

• Gross Profit

• Gross Profit Percentage

• Case Deal per Volume

• Return on Investment (ROI)

• Efficiency

• Effectiveness

• Retail Sales

• Retail Volume

• Retail Profit

• Retail Profit Percentage

• Percent Reduction from the Shelf Price

These financial measures are captured when the promotion is planned, updated during the promotion and finalised when the promotion is closed and all payments have been made.

The Traffic Light evaluation criteria compare the promotion with management parameters of key performance criteria.

These key criteria include;

• cost per volume

• spend per promotion

• spend percentage per promotion

• return on investment

• retailer profit percentage

• retailer profit percentage including co-op

Promax compares these criteria and assesses the promotion. A green light is given when all criteria are passed. If the promotion fails the management test then it may be given an amber or red signal depending on the degree to which it fails. Promax highlights to the user the criteria under which the promotion has failed giving the planner an opportunity to correct promotions pricing and spend to meet the criteria defined.