LEAD Marketing ConferenceRosemont, IL • October 2, 2012

Taking Trade Spending Management to the Next Level

TPM Used to Be ‘Simple’

• Slotting

• Off-Invoice

• One Size Fits All Displays

• Cookie-Cutter Approach with Retailers

TPM Has Increased in Complexity

• Changes in Shopping Behavior

• More Retailers and Distributors

• Private Label Quality Approaching Brand Quality

• Increase in Promotion Activities/Custom Activity

• Exponential Deductions/Charge-Back Volumes

• Pricing Pressure at All-Time High

• Focus Shifting to Trade Spend ROI

• Need to Demonstrate Joint Valuewith Retailers

Adding to the Complexity: The Trade ‘Team’

Sales

Finance Brokers

Marketing Operations

CEOs

Implications of Complexity

• Align to STRATEGY

• Measure at EVERY LEVEL

• Determine TRUE ROI

• Review and ADJUST Frequently

• INTEGRATE Information into Key Systems

Trade Spend is No Longer Simply the Cost of Doing Business.

It is a Strategic & Controllable Expense Allocated by the

Manufacturer according to their Business Strategy.

PEOPLE

TOOLSPROCESSCulture

&Governance

Going to Next Level Takes More Than Tools

People + Processes + Tools

• Creating the Right Culture Managing Change & End State

• Performance Goals KPIs & Team Incentives

• Process-Related Training Impacts Every Role and

Responsibility

PEOPLE

People + Processes + Tools

• Governance: Redo/Create Policies

• Sales Planning and Forecasting - Combining HQ & Account Planning

• Deduction Management

• Accruing Spend

• Collaborative Trade Planning with Customers

PROCESSES

People + Processes + Tools

Historically TPM Systems were:

•Expensive

•A Heavy Burden on IT

•Required Many Company Resources

•Accompanied by Maintenance Fees

•Took Months /Years to Implement

TOOLS

Let’s Meet One Company Who Took Action• Popping up Gourmet, Whole Grain Snacks That Our Consumers

LOVE!

• Company Began 5 Short Years Ago, With Retail Stores in Malls, Selling as Dale and Thomas Brand

• Popcorn, Indiana is Now Available at Retailers Nationwide (Food, Drug, Mass, Natural, Specialty)

• Competing In Trade-Oriented Category: 40%+ of Volume Sold on Promotion

• Went “Live” on TradeInsight TPM System in September 2011

Popcorn, Indiana… The Little Snack Food Company That No One Ever Remembers… Until They See Our Bag!

52wk Dollars +24% (Category +7%)

13.7 share, +2pts from YAG#2 Brand Behind Smartfood

KPI Trends Driving Popcorn, Indiana’s Success

Nielsen FY Periods and Latest 52wks ending 09/01/12

We Invented The Popinator, And It Became A Viral Hit!

Popcorn, Indiana Realized They Needed a Trade Tool As Distribution Expanded Across Channels

• More Complexity as New Customers Demanded Trade Dollars… We Needed to Spend, and we wanted it to be Effective!

• Snack Category is Highly Promoted, and we wanted to Maximize Display Exposure during Events, since Most Snack Purchases are Impulsive

• Consumers may be Loyal to a Snack Brand within a Given Segment, but Switch between Segments Based on what they “Trip Over” in the Store

At First, Trade Spend was Tracked in EXCELEXCEL is a Temporary Solution…at Best!•Fine for Building Budgets and Initial Sales Forecasting, but with Far too Many Limitations

• Updating Field Forecasts is Tedious, with Various Versions of Documents Circulating

• Changes in Customer’s Promotional Activity and Timing Shifts Hard to Capture

• No Feed to Order Management System, Requiring Planned Events to be Set up Independently to insure Proper Allowances are Applied

• Deductions Difficult to Clear, and Paid on Customer Documentation, Rather than Planned Promotions

• No Post-Promotion Analysis Capabilities

PEOPLE

TOOLSPROCESSCulture

&Governance

To Get To Next Level, Popcorn, Indiana Looked At …

Popcorn, Indiana: PEOPLE

• Improve Processes Where Possible. No “Legacy Process” was Immune from Review

• Adopt “Best Practices” From Other Companies(Listen to the Guy with the Grey Hair)

• Start with Clean Information in System

• Sales History was Accurate, but Spending wasn’t, so Importing it into New System wouldn’t be Advantageous

• Critical that Customer and Product Masters are Accurate, and a Great Time to Review Naming Conventions on Products

• Develop Reliable Metrics to Allow Measuring Results

• Believe the Numbers and Run Business Accordingly

Popcorn, Indiana: PROCESSES

Critical Areas of Interest Requiring Improvement

Analysis

Deductions

Sales Forecasting

Visibility

Visibility

BEFORE

•Lacked Visibility into Spending

•Took Too Long to Determine Total Spending of Event (usually not until the deduction came in)

•Difficult to Make Adjustments to Customer Plans

•S&OP Process was also a Challenge

AFTERVisibility without Aggregating Spreadsheets

Plan, Execute & Pay for all Trade Programs within one TPM System

Easier to Communicate Programs/Customer Activities

Track Sales and Spend at Program & Customer Level

Improved S&OP Process and Aligned Team with One Plan

Analysis

BEFORE

•Data Timeliness and Accuracy Not Consistent

•Needed to Integrate Distributor, Retailer and Syndicated Data

•Needed to Streamline Methodology for Monitoring of Retailer Compliance

AFTER

Measure Lift of Promotions

Have Begun to Optimize Promotions

o Which Tactics Work Best in Each Channel

o Which Price Points Drive the Most Lift while still Profitable

Validate Retailer Execution

Input for Customer P&Ls

Sales Forecasting

BEFORE

•Unable to View Entire Year’s Plan in Single Location

•Took Too Long to Gather Needed Information

•Multiple Spreadsheets and Formats to Consolidate

•Sales Didn’t Derive Benefit from Sales Forecasting Process

AFTERIntegrated Key Systems and Automated Data Feeds

Provide Sales with Better Forecasting “Start Point” by Pre-Populating Base Forecast from Channel Consumption Trends

Better Information for Production Means Orders Ship on Time and Compete!

Deductions and Chargebacks

BEFORE

•Took Too Long to Clear Deductions

•Limited Visibility into Spending Due to Allow Accurate Accrual

•Took Too Long to Understand Total Spend of an Event

•No Real Method for Disputing Post-Audit Deductions

AFTER

Huge Productivity Gainso Matching and Clearing

Deductions (Sales Ops)o Establishing Accruals to

Fund Future Deductions (Finance)

o Fewer “Spending Surprises”

Decline in Deduction Balance

More $ to Re-Deploy to Future Programs to Drive Revenue

We Have Measurable Results

• Completed Implementation in 5 Months with a Fully Functioning Planning System in Only 3 Months

• Deduction Balance Dropped from 3-1/2% of Sales to Less than 1% in 60 Days

• Reduce Forecasting Error KPI (MAPE) by Half Through Improved Processes and Visibility Enabled by TPM System

• Sales +24% and Share +2pts without Additional Trade Spend

Today’s TPM Systems Must…

22

33

55

11

66

44

77

Increase Promotion Effectiveness

Improve Sales Forecasting

Provide Visibility into Spend & Deductions

Accurately Identify Spend Liability

Make Better Use of Demand Data

Reconcile Deductions More Efficiently

Must Enable One Plan, One Place

Questions