SAP NEWSBYTE — Whereas most consumer products companies spend significant percentages of revenues on trade promotions and other monetary customer incentives, planning these activities is often ad hoc rather than based on sound insight from predictive analytics powered by customer and point-of-sale data. To address this issue, SAP AG (NYSE: SAP) today announced the SAP® Trade Promotion Optimization application. The software will deploy advanced modeling and predictive analytic capabilities to enable marketing and sales teams to systematically predict and optimize promotion outcomes, including revenue and profit, for both manufacturers and retailers. The announcement was made at the Consumer Goods Sales and Marketing Summit, being held June 6 – 8, 2011, in New York.
SAP Trade Promotion Optimization will facilitate promotion planning by allowing users to perform what-if simulations based on order history and other internal data, retail point-of-sale, syndicated retail measurement data and market research data in order to obtain reliable recommendations for promotional activity – from individual events to annual promotion plans. Users will be able to assess and define best promotion opportunities for a given product such as discounts, rebates or premiums, taking into consideration effects such as seasonality, holidays, product availability, store closures, cannibalization of products and price changes. In addition, the software will encourage collaboration between consumer goods manufacturers and their retail and other channel partners. SAP Trade Promotion Optimization can help to identify promotional activities that support the business objectives of both manufacturers and retail, thus helping improve financial performance.
SAP Trade Promotion Optimization is designed to run either in conjunction with an existing implementation of the SAP® Account and Trade Promotion Management for Consumer Products package or as a stand-alone application for use with other third-party trade promotion management solutions. Integration into the SAP environment allows customers to achieve an unprecedented degree of control and real-time visibility throughout the entire trade promotions process.
To help ensure that the new solution addresses real-world business challenges, SAP worked closely with three consumer industry customers in EMEA and North America. In the development phase, SAP ran real customer data through the modeling and optimization engine, which serves as the foundation for the SAP Trade Promotion Optimization application, to test the quality of results.
“The modeling platform from SAP met our expectations, which are above industry average in terms of model fits, data representation and diagnostics,” says Amjad Malik, vice president, Business Analytics, The Kellogg’s Company, a cereal and convenience food producer and one of the three co-innovation partners involved.
SAP Trade Promotion Optimization is currently available to ramp-up customers.