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We Don’t Plan That Way!

A client of ours heard from their sales team that they have never planned promotional events to the product SKU or product group level; in their words “We don’t plan like that!”. That comment led me to think about why a consumer goods manufacturer deploys a trade promotion management solution, and should it conform to the yesterday process or build to the tomorrow process. Further, what are the objectives of the various stake holders in the organization and are they at cross purposes? This article attempts to explore these issues which ultimately lead to change management issues…or not.

More and more, trade promotion management solution initiatives are being driven by the finance department because, in part, trade promotion spending is growing steadily higher with return on investments growing steadily lower. A noted observer of the trade promotion space recently noted that the average trade dollars expended by CPG manufacturers has exceeded 20% of gross revenues, and that number is approaching double that 20% range in some categories and geographies. This pundit went on to declare that TPM solutions were no longer a source of competitive advantage, but TPM solution are, in fact, a necessity. Why should a trade promotion management solution be deemed a necessity, and why are finance departments driving these projects?

Finance departments are responsible, in part, for knowing how much money is being spent on the trade spending line for each product for each week, or at least for each month or fiscal period. In addition, more and more companies are creating sales finance departments to do more return on invest analyses, and to determine whether each SKU is paying its way. But wait! Your company’s trade promotion process has always just done trade spending at the brand level, and have depended on Excel formulas to estimate how much is being spent for each SKU. That process has not even allowed for an understanding of what actually happened financially versus what was planned. The level of financial understanding is greatly enhanced by a good trade promotion management solution that stores good financial data down to the account, SKU and week level. Measures such as manufacture profit, retailer profit, total OI spend, total BB spend etc. all provide great line of sight to important analyses such as assortment optimization, trade promotion post analyses as well as the financial fundamentals like accruing the right amounts to the general ledger.

So why is the fuss coming from the sales department? Perhaps, there are conflicting objectives. When sales finance is held accountable for getting the right trade spending accrued to the right month and SKU, and to determine whether trade spending has been profitable; sales may have a different agenda. Sales may want to be able to go spend their trade funds at the account without the onus of being profitable held over their head, and they may be concerned that not only will they be held accountable for hitting a volume objective, but also be profitable in the pursuit. This is a Yin & Yang that needs to be addressed, because the goals of each department are simply not aligned. The sales team will fight the movement to a trade planning tool that will bring more efficiency, visibility and at very least sell more goods for the same money. There are numbers that suggest a comprehensive trade promotion management system can drop as much as 10% to the bottom line by just cleaning up unprofitable and inefficient trade spending.

The finance team needs to know how profitable the company’s customers are, and to insure the company’s trade spending dollars are as efficient as possible. Finance also needs visibility to the deduction settlement process to insure deductions and the spending they represent are being properly accounted for. Additionally, finance needs to insure future trade spending liabilities are clearly identified and the proper amount of funding is being accrued. As companies deploy sales finance departments these financially astute people can also help the sales team analyze the financial viability of their promotional plans.

However, the sales team cannot be allowed to fight the effort to move to a more granular planning process; just because “We don’t plan that way”. In order for the tomorrow process to work, everyone from the senior management team to the rank and file account managers must be on board. Often times the account management teams fear that someone is scrutinizing their trade funds expenditures, and sometimes the account managers do spend money unwisely. The fear of big brother watching over their plans or those unwise spending practices can become an obstacle to the account managers willingly adopting the tomorrow process. A trade promotion management solution cannot be viewed as a sales system or a finance system; a TPM solution must be viewed as a company business management solution.

What are some of the ways changing the culture can be accomplished?

  1. There must be senior management ownership, engagement and mandate that there is a new way of doing business at your company.
  2. Deploy a stakeholder team that is purposely cross functional, and insure that team has the time to drive the project through to completion.
  3. A gradual shift from yesterday’s process to tomorrow’s process will help the sales team make the process adjustment.
  4. Aligning sales’ objectives with those of the sales finance team may help move sales from the idea of selling volume at any price to selling profitable volume.
  5. Imagine how a sales person might respond if part their compensation package included a percentage of the trade dollar savings they might gain by planning more profitable promotions.
  6. Find the promotable people in your organization to champion the new way doing business with tomorrow’s process.
  7. Adopt the same language up and down the organization so that everyone views the same KPI’s in the same manner.

Providing visibility to certain key metrics might also help the sales team understand a good promotion outcome versus a bad one. What percent of dollar revenue, for a promotion, should be spent? How much per incremental unit should be spent? Is $1.54/incremental unit for a $5.99 every day retail priced item too much? Here is a Promotion Scorecard from our Trade Promotion Management solution:

Can your sales and finance teams see this level of information, and react to it with a plan of action driven by facts? A promotion scorecard can bring together metrics such as profit, % of spend to total dollar sales and cost/incremental unit. If your sales team cannot see these types of metrics, then we should make plans to discuss how can help your team drive more profitability into your trade spending practices., LLC is a CPG sales and marketing solutions provider building tools on the platform. We can be reached at 678-503-5001 Ext. 301 or email Rick Pensa at See more information about the CPGToolBox Trade Planner by clicking on the following link .




TPM Systems: Connect Corporate Planning and Business Intelligence to Event-Level Planning

TPM Systems: Connect Corporate Planning and Business Intelligence to Event-Level Planning

By Tim Vollman, President S3 Mobility and Rick Pensa, President/CEO, LLC

Many companies today perform high level corporate planning (customer P&L planning) and tactical Trade Promotion Management (TPM) event level planning in two different systems. This is a major factor in the ‘disconnect’ between original budgets, revised planning, and the detailed planning that exists within the TPM system. In most cases, once the detailed plan is created, there are no controls or processes to ensure that it is connected to your overall corporate plan. The breakdown between these two systems can often result in TPM overspends and plan shortfalls.

Guiding Principles to Planning

One of the keys to effective planning is to have a system that permits you to establish goals, and then set the related tactical event plans to execute your plan objectives. This would include goals such as market share by brand, customer profit margin, and other similar metrics.

Another critical key is to connect the corporate plan to the tactical event plan, which requires that you first decide on the level of planning for both corporate and the event level planning. Typically, your corporate plan is performed at a customer and product summary level. This allows for more of a macro planning approach, in which you can perform ‘what ifs’ and quickly determine the changes in pricing, costs, and the impact to overall profit. This permits users to set goals, and then create tactical event plans to meet these goals. Top down planning using allocation methods are essential to create quick directional views that subsequently provide for an iterative process.

Clearly, setting your customer and brand-level tactics is not something you want to first perform at an event level, as you must first determine if your volume, pricing and related costs will derive your desired results.

Once your goals have been set, and you have created your plan, the next step is to ‘connect’ this plan to your detailed tactical event level plan. A seamless process must also exist so that base volume, lift volume and related spending at the corporate level are truly connected at the event level. This means that downstream tactical event level changes are managed, recorded and summarized back to the corporate planning level, thus keeping the respective systems synchronized.

Additionally, trade spending controls are implemented at the tactical event level providing the account manager and senior management with an understanding of how the tactical plans will impact the higher level strategic planning goals and KPI’s. This is done through an effective trade funds management (TFM) process that assigns tactical event funding from one or more trade spending budgets/funds.

Building in the Proper Controls

Proper controls must be implemented throughout the planning process. Controls such as spending limits, spend per unit, and related lift-to-cost ratios are all essential to forcing compliance and approvals throughout your process. This reduces the work flow time from contract initiation through approval and finally through resolution.

Best practices such as…

  • Having a rule-based system, allows for a streamlined process, where only outliers require oversight.
  • Having process driven oversight capabilities allowing visibility to non-compliant events
  • Knowing planned spending by event or product visible up the hierarchy
  • Utilizing cost information to review margins and contribution
  • Providing visibility to historical pricing and to protect against margin erosion
  • Connecting actual settlement spending with specific tactical events

…all provide important processes, metrics and overall controls to connect Corporate and Event planning, while providing the efficient workflow processes.

About the Author:

Rick Pensa is the president/CEO of, LLC and has more than 23 years of focus on the Trade Promotion Management process, TPM analytics and system implementation in the CPG industry., LLC is focused on providing sales and marketing tools built on the platform.

Tim Vollman is the president of S3 Mobility and has spent more than 25 years focused in Corporate Planning, Trade Promotion Management, and related Business intelligence systems. Mr. Vollman has founded three software companies in the Planning/ Optimization sector.

Is the Price Right?

In the current economy, everyone is talking about retail price. Many sales people subscribe to the philosophy that if low price sells a lot of goods, then a lower price will sell more. However, that is not always the case. We need some caution and a little scientific evidence before driving retail prices to all time lows. Product pricing cannot be developed in a vacuum and there are many variables to consider. Today, we will discuss price gap strategy. Look for upcoming articles on EDLP strategy and on price elasticity.

Price Gap Strategy – What is your product’s price gap relative to Private Label and/or other sub-segments (such as the value versus premium segment) of your category? A viable pricing strategy must consider price gapping between segments as well as between Private Label and competing brands. If the price gap dynamics are not understood, both the retailer and the manufacturer risk lost sales revenue.

For example in the dairy category, there is very little perceived quality difference between branded and Private Label milk by the average consumer. In some cases, the store brand quality and taste might even be as trusted as the leading brand. In lieu of a perceived product differentiation by consumers, branded products are forced to maintain a narrower price gap relative to Private Label products.

In the Orange Juice category, the product dynamics are different than the milk category.

  • Private Label sells nearly 51% of the Reconstituted Orange Juice (Recon-OJ) segment’s gallon sales.
  • Private Label sells 8% of Not From Concentrate Orange Juice (NFC-OJ) segment’s sales.
  • Both products are located next to each other in the refrigerated case.
  • NFC-OJ is perceived as a premium product appealing to high income, older, more educated urban and suburban consumers.
  • Recon-OJ (and frozen) Orange Juice appeals to blue collar, lower income, and rural consumers.


Consider the level of interaction between these Orange Juice segments and how their interaction impacts the price to value relationship perception for the consumer.


Let’s look at a consumer decision hierarchy. When a consumer walks into a store; what triggers the purchase decision?

  1. The first decision trigger is quality: Do I want to buy a quality product? Yes, of course!
  2. The second decision trigger is brand: Is my brand available?
  3. The third decision trigger is price: Is my brand on sale? What is my brand’s price relative to other products in the same category and to Private Label? Are there more economical alternatives available to meet my needs, outside the direct category?



If a non-price sensitive Orange Juice consumer is shopping for Orange Juice, the decision sequence might be;

  1. Is this a quality product? NFC-OJ tastes better and the national brand consistently delivers a higher quality product.
  2. Is my brand available? Yes
  3. How much does it cost? The price is more but it’s worth it.


NFC-OJ consumers are less likely to switch between branded NFC-OJ and Private Label NFC-OJ unless the price gap becomes drastic. How drastic that gap is can be determined through consumer and statistical analyses. NFC-OJ manufacturers can afford a larger gap between their brand and Private Label alternatives. Their consumers are not as price sensitive.

If a price sensitive Orange Juice consumer, who is not convinced of the perceived benefits of NFC-OJ, is shopping for Orange Juice, the decision sequence might be different.

  1. Is this a quality product? There’s no difference in quality.
  2. What brands are available? Any brand will do.
  3. How much does it cost? The NFC-OJ national brand is $2.99 for a half gallon of and the store brand is $1.99 for a half gallon. The Recon-OJ is for $3.99 for a gallon. The store’s brand saves me even more at $3.79. There’s no difference, so I will pick the least expensive product.


The economy segment is shopped by consumers who are more price sensitive, so the price gap to Private Label must be more narrow or they will switch. The concept of price gap is an important consideration for a complete price strategy. The impact of segment interaction needs to be quantified in order to predict volume response. You must understand how to structure the gap between your product and related products and segments by understanding consumer interaction. How interchangeable are competing products in the consumers’ mind? With a lower consumer interaction between products a higher price gap can be tolerated with minimal volume loss. If you know the volume response for each 1% of price gap between competing products, you can predict how much volume will flow from higher priced products to lower priced products.

Contact Rick Pensa at 770-425-4243 to schedule a free 1 hour consultation on ways to get a better handle on your pricing. Visit our website at to browse our services and deliverables.


Pivot Tables to the Rescue: Formula Finesse

One of the biggest frustrations with pivot tables is the notion that your formulas need to be built outside the main body of the pivot table…the good news is you can put formulas in your pivot tables. Excel 2007 supports a wide range of Excel functions within the pivot table formula wizard. In this article we will show you how to build formulas in your pivot tables and look into some interesting formulas you can use in pursuit of Category Management analyses.

Just to be clear, Excel does not support array formulas which are formulas that affect a range of cells i.e. sum(A3:A34) or countA(B4:B25). However, most any function that deals with a number in each cell can be employed in your pivot table formulas including logical formulas such as If(UNIT>100, UNIT/100,0). Here is how it works:

  1. Create a pivot table by placing your cursor in the cell “A1” position of your data and select insert Pivot Table option. Then and add (drag) at least one field in the Row or Column section and add (drag) a field in the Values section of the pivot table wizard.
  2. With your cursor anywhere in the pivot table (you are in the Options menu), find the Tools section select Formulas to open the Formulas Wizard (Excel 2007); this Wizard can be accessed in the pivot table tool bar in Excel 2003.

  3. Then select the Calculated Field option from the drop down menu under Formulas.

  4. The Formula Wizard consists of the following fields:
    1. Name – Use this field to type in the name of the field. Caution – Do not use the a name that you will eventually use to display in the pivot table as Excel puts the accumulation method as a part of the name i.e. “Pct Chg” will look like “Avg of Pct Chg”. Recommendation – Use a more cryptic name (like $ Pct Chg) in the Formula Wizard so you can reserve the naming description for use in the pivot table (more on this later).
    2. Formula – Enter your formula in this box. For purpose of this example we will build a simple Dollar Percent Change Versus Year Ago calculation. You type the operands, and select the fields. Specifically you type =) then you select Dollar Sales from the Fields selection tool. You type – then you select YAG Dollar. Now you close the parenthesis with )/ then you select YAG Dollar (again). Now your formula will look like the one below.


    3. Once the formula is finished click the add button to add the newly developed field to the pivot table field list. Now the field can be added (dragged) to your pivot table Values section.

  5. The newly created field can now be adjusted by creating a more readable name and set the number type etc. from the Value Field Settings option. This can be accessed by right clicking on the Sum of $ Pct Chg tile.

  6. In the Value Field Settings Wizard –

    1. The name can be changed to any unique field name (there can’t be two fields with the same name)
    2. The field summarization method can be set by selecting Sum, Count, and Average etc.
    3. The number format can set by clicking on the Number Format button and selecting how you want numbers to be displayed
  7. Click OK when you have completed your formula and add it to your pivot table.

While we have only explored a simple formula such as Percent Change, but more complex formulas such as the following example can be used as well –
= IF(‘Unit Sales’ >100,’Unit Sales’ /100) to identify stores with unit sales over a certain threshold. The pivot table could be sorted on this calculated field to cluster high or low performing stores.

Insight, Information & Consulting Services, Inc. can help your company develop a data visualization strategy leveraging pivot table technology to display information not just report data. Call Rick Pensa at 770-425-4243 to set up a complementary needs assessment, or visit our website at .

“Who Moved My Cheese?” Change Management & the Challenges of Implementing a New Trade Promotion System


"Today more than ever business environments are rapidly changing, requiring your company to continuously adapt. If environmental complexities including customer demands, regulatory requirements, and competition are not adequately addressed, businesses run a high risk of failure." Clarkston Consulting,

Change is natural and can be very positive. Staying competitive in these challenging economic times requires change. Managing change means managing people's fears which can be unpredictable. We all seem to be trying to figure out how to manage change and there are many bestselling books are out there on the topic to help. Implementing a new Trade Promotion Management (TPM) process and tracking tools can usher in some of the most difficult change management challenges imaginable. However, if properly approached change management can be successfully implemented, but there is a right way and a wrong way to approach such a daunting challenge as a new TPM process or a new planning tool.

"Who Moved My Cheese?," written by Spencer Johnson, M.D., is a #1 best selling story of four characters living in a maze. Each one faces unexpected change when they discover their cheese has disappeared. Each one adapts to change in the maze differently. One doesn't adapt at all. Metaphorically, the maze represents our organizations and communities and the cheese represents our careers, relationships, wealth, etc. This timeless allegory reveals profound truths to individuals and organizations dealing with change. Moral: Don't get upset by change. Adapt for long term success.

According to the Graziadio Business Report from Pepperdine University, there are some basic principles to remember when implementing change:

  1. Do no harm. Implementing change poorly is sometimes worse than not implementing change at all.
  2. All change involves personal choice. Any organizational change is preceded by personal change.
  3. The relationship between change and performance is not instantaneous. As far as humans are concerned, there is so such thing as an instantaneous transformation.
  4. Connect change to business strategy. Change should only be pursued in the context of a clear goal.
  5. Involvement breeds commitment. Managers who do not involve their workers in decisions run the risk of stalled change efforts.
  6. Any good change effort results in increased capacity to face change in the future. It's one thing to "install" change and another thing to "implement" change.


Managers and leaders sometimes forget these principals in their haste to adapt the "latest and greatest" ideas. Although managing change is difficult, remembering the basics can help ease the transition. One change some progressive companies are making is to implement a Trade Promotion Management (TPM) system to improve the efficiency of their forecasting and trade promotion spending. When change is connected with a clear business strategy, it is easier to obtain buy in throughout the organization. The process, however, is not without its unique set of challenges.

Challenge #1: Getting buy in throughout the organization.

How do you select and implement rather than "install" a system? The very first step is to collect the stake holders (sales, marketing, finance, logistics, etc.). This group should consist of cross-functional managers who are peers and will actually be using the new process or system. Remember, involvement breeds commitment. These cross-functional representatives, as well as all those who will be involved in the process, need their success tied to the success of the implementation. Establishing quantifiable group goals and measuring the successful accomplishment will help keep the team focus on obtaining results. The next step is to gather and carefully consider the input from the groups and address concerns as they relate to process. This takes more time and coordination, but will pay dividends with the support it garners. The entire process needs to be tied to some level of satisfaction within the organization and the question; "What's in it for me?," needs to be answered. The job can be done faster, easier, more accurately; the individual may be able to make more money, etc., because of this new process and software. Make them see the value as it affects them personally. The new system should be "sold" throughout the organization by showing people what they have to gain. Personal change precedes organizational change.


Challenge #2: Getting the right process.

In the case of a TPM process, a series of sales planning and trade spending decisions must be made and communicated throughout the organization. The question is how to best streamline the flow of information from the trade spending planning process, to the approval process, to the execution process, to the evaluation process.

The team must evaluate and perhaps re-write the TPM process. Perhaps there was no formal process and one must be invented. Perhaps the process evolved around systems that no longer exist and is no longer effective. Careful consideration should be given to avoid the "not invented here" syndrome and once again, input from all functional areas must be collected and considered. If the process is broken, a software tool wrapped around a wrong process will actually inhibit good change management. If the process is intuitively smooth, clean, and well thought out, then a software tool wrapped around that new process will actually enhance change management.

The implementation team should establish a timeline to implement the process with success milestones along the way. These success milestones should be communicated to everyone in the organization to keep each person focused on the achievement. This also serves to re-focus if the group gets off track. In a large organization, it's better to select a small test group and make sure the process flows, before extending the new process and system to the entire company. Incremental change is important when adopting a new process. Do one thing well first. Then move on to other, more complicated areas.



Challenge #3: Getting the right tools.

Finding a tool that is easy to implement, gets the job done, and is affordable is a huge accomplishment. Often CPG companies will spend more than they need to just to get to a viable trade planning tool. The bell curve in how people learn technology will impact project implementation. Some learn fast, some never learn, and some learn what they need to accomplish their jobs. The user interface must be simple, easy to learn and intuitive to the user. If not, it's an uphill battle.
Fox diagram.jpg

There are many companies selling software solutions for demand forecasting, supply chain management, retail and warehouse inventory control, and logistics planning, etc. One such integrated Sales & Operations Planning tool built for the consumer products industry comes complete with the added benefit of an integrated trade spending management component, is the Fox Collaborative Planning System.

This tool allows an account manager to build a forecast based on his individual accounts and product group promotions, using historical volume & base volume, promotional tactical lifts, and spending budgets. The system communicates volume, spending, and approval status throughout the organization. Forecasts are literally built from the ground up, one product group at a time, account by account based on factual lift calculations resulting in a one number forecast tool. Spending authority and budgets come down from management, get allocated, approved, presented to customers, approved again, and are officially "planned" and in the system.

Gaps between business objectives and forecasts are easily visualized and understood. Red flags are flown when inventory issues arise and spending goes above budget. One of the major strengths of this system is the ability to plan and evaluate and to use this information in future planning cycles.

Challenge #4: Getting used to new levels of accountability.

When you go from a forecasting and planning approach that uses a bit of mystery, smoke, and mirrors to a logical, fact based system, you will likely ruffle some feathers. The sense of threat, fear, and loss of control increases when you're under the microscope and all your numbers can be questioned, analyzed, and monitored. Some sales managers get defensive and are uncomfortable losing their proprietary knowledge set (their "job security"). They like keeping total control over their key accounts. This can be overcome with time, involvement, training, reassurance and consistent objectives, that is, their personal success tied to the success of the implementation.

Senior management must stay the course as the new trade planning process and tools are implemented. Volume at any cost, quarterly loads, and mortgaging volume must be replaced with fact based planning, event based forecast numbers and a "one number" system that is accepted across the organization.

Although there are challenges to implementing any type of change, you can be successful implementing a new trade promotion management system. Keep in mind the pitfalls, set goals, and establish accountability, take baby steps, and go.

Insight, information & Consulting Services, Inc. has the experience and the knowledge to help your company navigate the Trade Promotion Management water. We can help your company develop the right processes, select the best and most efficient tool; and put in place the right components to help minimize the impact of change management on your TPM project. Please call us to discuss your needs and ask for Rick Pensa at 770-425-4243 or on the web at .