Our client was undertaking a range of sales and marketing activities, including heavy trade promotions.
We were engaged to evaluate the full marketing mix, with a view to optimising marketing efficiency across their brands and activities.
One of their key questions concerned the appropriate balance between advertising and trade promotions.
We evaluated the activity and found that the bulk of promotions were unprofitable. Further conversations with stakeholders in the sales and finance communities revealed that a tacit understanding of the situation already existed. Unprofitable promotions were being run to achieve individual sales targets, but being justified on the grounds of ‘strategic importance’. The problem was one of Process, rather than Insight.
Improving promotional profitability was set as a goal. Alongside this went a change to promotional planning processes that increased the burden of proof for planning ‘strategic’ promotions, and moved the responsibility for promotional planning out of sales and into management finance.
In a subsequent series of meetings we worked with the finance team to define a ‘lite’ evaluation procedure that they could undertake on a ‘business as usual basis’, to give them a working approximation to the answer without recourse to formal modelling. We coached them on application and reviewed their analysis until they gained confidence with the results.