AI + TPM: A Smarter Way for CPGs to Boost Sales, Revenue, and True ROI

Trade promotions are one of the largest expenses in a consumer packaged goods (CPG) company’s budget, often representing 20% or more of gross revenue.

Despite this substantial investment, many manufacturers and suppliers still struggle to answer a fundamental question: Are our trade promotions effective?

As CPG leaders seek to improve efficiency, effectiveness, and profitability within their organizations, trade promotion management (TPM) is ripe for transformation. Increasingly, the engine behind that transformation is AI-powered insights, delivered through scalable, integrated SaaS solutions. These advancements make TPM more measurable, manageable, and optimizable than ever before.

The Problem with Traditional TPM

Traditionally, TPM has relied on retrospective and siloed data analysis. Finance departments examine overall spending. Sales teams monitor account-level performance. Marketing focuses on promotional lift, often with limited clarity on attribution. Meanwhile, operations teams are left to respond to unpredictable spikes in consumer demand.

This fragmented approach leads to several challenges for consumer brands of all sizes:

• Limited visibility into the ROI for promotions, marketing campaigns, and retailer collaborations
• Inconsistent planning cycles across different departments
• Manual data collection and management processes that are prone to errors, wasting valuable time and resources
• Difficulty in adjusting promotional strategies and inventory management in real time

The consequences? Missed sales and growth opportunities, inefficient trade spending, and a breakdown of trust between CPGs and their retail partners.

AI + TPM: A Smarter Way Forward

Modern SaaS platforms are transforming the landscape by integrating artificial intelligence (AI) and machine learning (ML) into trade promotion management. These technologies provide a cohesive, data-driven approach to planning, executing, and assessing promotions—shifting from guesswork to valuable insights and actionable strategies.

Here’s how AI is enhancing trade promotion management across key functions in CPG:

1. Finance & Sales: Optimizing Promotional Spend

Using AI, teams can analyze historical promotional performance across various products, categories, accounts, and regions to identify patterns and outliers. This leads to several key benefits:

• Predictive Modeling: Forecasting promotional effectiveness and potential product cannibalization
• Trade Spend Optimization: Properly allocating budgets to maximize ROI
• Scenario Planning: Simulating the financial impact of different factors such as timing, discount levels, and media spend

As a result, finance teams can have greater confidence in their data, while sales teams can approach retail negotiations for new product introductions and placements armed with reliable, data-driven insights rather than relying on instinct.

2. Analytics & Insights: Real-Time ROI Tracking

AI-powered platforms enable CPG data and analytics teams to:

• Monitor actual promotion results compared to expected outcomes as promotions progress.
• Adapt assumptions in real-time based on product, promotion, and/or retailer performance.
• Create retailer-specific dashboards and reports that highlight what is effective and what isn't.

This approach leads to more agile sales and demand planning cycles and ensures that strategic business decisions are based on data evidence rather than stubbornness.

3. Sales Execution: Personalized, Data-Driven Offers

AI can categorize retail partners based on their performance history, shopper demographics, and responsiveness to promotions. As a result, businesses can create more personalized promotional strategies tailored to each retailer's potential. These strategies include:

• Recommended types of promotional offers, their durations, and discount tiers
• Localized tactics that respond to regional demand signals
• Trigger-based planning that adjusts as new data becomes available

This level of personalization strengthens relationships with retailers and drives incremental sales without incurring unnecessary expenses.

Why SaaS Is the Key Enabler

Implementing AI-driven TPM doesn’t require a complete overhaul of your tech stack; instead, it necessitates the right SaaS platform built on a solid foundation of retail data. Retail Velocity’s cloud-based VELOCITY^® retail data platform automatically collects and delivers clean, harmonized, and normalized point-of-sale and inventory data daily—at both the item and store levels.

VELOCITY^® can seamlessly gather and integrate data from various sources, including retailers, retailer portals, distributors, e-commerce partners, ERP systems, and syndicated retail data providers. This functionality allows consumer brands and retailers to utilize accurate, unified data and actionable insights to:

• Improve overall trade promotion planning and execution
• Enhance demand forecasting for future promotions
• Determine optimal product allocations for each store
• Ensure on-shelf availability for high-performing stores
• Identify root causes and reduce issues of out-of-stocks, low-selling products, and markdowns
• Eliminate trade promotion spending with underperforming retailers and reinvest in top performers
• Measure sales lift by store, chain, region, market, and channel
• Strengthen collaborative planning and promotions with retailer buyers
• Improve scalable ML models tailored to your business

This approach is not just about smarter planning; it empowers teams across your organization to act on reliable insights in real time, across all departments.

Trade Promotions, Reimagined

AI is not just enhancing trade promotion management; it is redefining what is possible. By utilizing predictive analytics, optimizing trade spending, and implementing real-time feedback loops, CPG companies can transform trade promotion management into a profit center rather than a cost center.

In today’s highly competitive retail landscape—both online and in physical stores—every dollar must work harder to meet the ever-changing demands of consumers. This means brands need to work smarter and operate more efficiently. AI, supported by accurate daily SKU- and store-level retail data from a SaaS solution like VELOCITY^®, ensures that your trade promotion dollars are effective, driving growth, improving retailer joint business planning, and increasing agility across your organization.

Are you ready to eliminate the guesswork in trade promotions? Let’s discuss how Retail Velocity can assist your team in leveraging better data to enhance your AI applications, ultimately leading to improved results with greater confidence. Contact us today.