NEW YORK — Consumer packaged goods companies have invested heavily in technology platforms to improve their trade promotion performance but may lack the talent or business proceeds to capitalize on those investments, according to a new study from Accenture.
Accenture's Perfect Promotion Survey, based on interviews with 350 senior executives at large CPG companies, found that 61% of respondents believe their technology investments have produced a wealth of data that can help improve their trade promotion performance but they lack the talent needed to put the data to its most effective use and boost the return on their analytics investment. In fact, 1-in-5 executives (21%) admit that they trust their intuition more than the available data to make trade promotion-related decisions.
The study also reveals that CPG companies have changed their trade promotion investments since the start of the economic downturn in 2008. According to the study, 71% of CPG companies have increased their trade promotion spending in response to the economic downturn — 23% by more than one. Many executives participating in the study believe the additional investment has delivered additional value: 27% believe their return on investment, or ROI, has increased by more than a quarter since the downturn, while 16% believe that their ROI has declined.
Slightly more than half (53%) believe their company’s trade promotion performance is good, but could be improved. However, 28% believe it to be either “totally ineffective” or in need of significant improvement, and only 19% view their trade promotion performance as industry leading.
“The right approach to trade promotions is to blend leading edge technology with outstanding talent and make better use of predictive analytics and greater process integration across the business,” said Ed Stark, a managing director in Accenture’s Consumer Goods & Services practice. “In many cases, the heroic efforts of individuals in CPG companies can hide many of the failings of their trade promotion efforts, and the successes that are achieved often occur in spite of, not because of, the tools, talent and processes at their disposal.”
According to the survey, most respondents identify predictive analytics as a critical tool for improving trade promotion performance. More than half (54%) view predictive analytics as important or very important for companies seeking improvements in this area, and 56% rated predictive analytics as being very desirable or the most desirable way for their company to improve its trade promotion efforts. However, a significant number (24%) believe predictive analytics has limited importance. “We have detected a strong feeling that companies are not making the most of the data that their technology investments have generated, and, perhaps more worrisome, a large proportion of our survey respondents do not trust the data,” said Alex Kushnir, a managing director in Accenture’s Consumer Goods & Services practice.
Other key findings from the study included:
- The volatile economic climate has encouraged two-thirds (66%) of CPG companies to switch more than one-quarter of their trade promotion spend to digital channels, and 20% expect to shift more than half of their trade promotion dollars to digital channels during 2013.
- 28% identified closer collaboration with retailers as being crucial to improving their trade promotions initiatives.
- 43% of CPG companies believe that greater integration is required between the business functions involved in the trade promotion process.
- 66% would consider outsourcing all or part of their trade promotion process.
- The same proportion (66%) would use outsourced talent to help analyze and help them better understand their data.
- 55% would outsource to help leverage the data they have captured.