COVID’s impact on retail activities has left companies trying to maximize promotions on a limited budget and a tight timeframe. How can AI help them solve this puzzle?
To say COVID-19 transformed retail is an understatement. It’s hard to think of an area that wasn’t affected – including promotional activities. Suddenly, retailers and manufacturers were trying to figure out how to deal with multiple unforeseen challenges, including shortened timelines and altered consumer behaviors.
Just Trade Promotion Management is no Longer Enough
The idea of maximizing trade promotions is by no means new; trade promotion management (TPM) software has helped many companies plan and track their activities. More recently, we’ve seen a wave of emphasis on trade promotion optimization (TPO), which applied data analytics to TPM and allowed users to generate smarter, more granular insight.
But in today’s world, TPM and TPO aren’t enough to keep up with the competition, let alone navigate the treacherous waters around COVID-19 disruptions. To understand how to …
- Allocate spends across different promotional activities
- Optimize trade investments across brands
- Deal with limited promotional budgets and timeframes
… retailers need to invest in trade promotion intelligence (TPI). It’s the next generation of TPO, built around a core of AI and machine learning and designed to be faster, smarter, and more comprehensive than its predecessors – and that’s exactly what we need right now.
The Benefits of AI-Powered Trade Promotion Intelligence
Lee Cummings, vice president of SymphonyRetailAI, recently authored an incisive look at the COVID trade promotions bulge. In the post, he talks about how companies have to deal with compressed trade promotions and surplus trade dollars. I encourage you to read it, but essentially what many companies are facing is a shorter timeline for using their promotional budget. And this is where AI can really help, synthesizing a wide range of consumer insights and developing forecasts and optimization plans in real time.
When considering trade promotion effectiveness, it’s imperative to understand three key areas:
- The manufacturer’s plan in terms of goals, type, and budget for the campaign
- The retailer’s implementation of the plan
- The consumer response to media, trends, and competitor’s actions
Trade promotion intelligence tools can help you understand purchasing behaviors and cycles as they develop, using predictive analytics to uncover potential motivations and reactions to promotions.
The great thing about data analytics is that it introduced a higher level of granularity to trade promotion management; AI carries this to the next level, allowing businesses to look at PPG, account, outlet, and DB-level data. What’s more, they can now incorporate multiple levels into a single model. Plus, AI-powered TPI solutions can provide recommendations that take into consideration business goals and complex variables. Together, these features allow retailers to look at their product hierarchies and promotion types and optimize how they allocate funds. It also helps develop a more robust strategy by simulating multiple what-if scenarios.
To assist businesses in maximizing their trade promotions, we launched NAVIK TradeAI, a trade promotions insight solution. In the last six months, the value of a tool that quickly creates customized trade promotion calendars at an individual retailer level has become very clear.
How NAVIK TradeAI Can Help During and After COVID
After the COVID pandemic ends, retailers and manufacturers alike will still need flexibility and agility. They’ll still need to create data-backed plans and incorporate numerous information sources. Trade promotion insights predated this pandemic, and they’ll outlast it, too.
What can an AI-based TPI tool do? In addition to the outcomes discussed in the previous section, it can:
- Help create a detailed promotional calendar, with recommendations on frequency and execution periods.
- Maximize business sales by developing detailed strategies at the account and PPG level.
- Determine the percent uplift in sales due to trade promotions.
- Minimize promotion cannibalization.
Despite all the change and uncertainty, this is a good time to incorporate AI-based trade promotion insights into your existing toolkit. If you’d like to talk with an expert from our trade promotions team, let us know.