Perspective: Digital Disruption in Consumer Packaged Goods — Trade Promotion Management
This IDC Manufacturing Insights Perspective examines the current state of trade promotion management (TPM) in the consumer products industry. It's a topic that we have studied for some years now, and one of the advantages of doing a document consistently across a period of time is the ability to make year-on-year comparisons or, failing that, to at least be able to draw some broad conclusions about progress made, or not made. Trade promotion is something that consumer goods companies have consistently cited as important to how they run their business, and they have certainly been pursuing improvements, in terms of both the business process and the technology applied to that process. It's largely been answering the "how do I do what I do today better?" question, but our sense is that consumer goods companies are beginning to also ask themselves "how should I be doing these things in the future?" We'll spend some time here, therefore, beginning to talk about digital "transformation," but not digital for digital's sake; rather how does technology allow businesses to behave fundamentally differently, to do things in ways that were not previously possible (or at least practical). The data in this document comes from two sources: first, a survey that we did with CGT on sales and marketing topics specifically and second, an IDC Manufacturing Insights survey that specifically looked at digital disruption in the consumer products industry.As we move rapidly into a world where customer centricity is the primary moving force in the industry, consumer goods companies are going to have to answer some tricky questions. For example, what happens to trade promotion funding in an omni-channel world? This is not a big deal when direct–to-consumer sales are in small single digits, but what happens when they become 20% of total sales, or more? For a company that manages an annual trade promotion budget of $500 million, what happens to the $100 million that no longer supports traditional retail sales? Does it get converted to consumer promotion vehicles, taken to the bottom line as "savings," or something else? In our discussions with consumer goods manufacturers, not a lot of manufacturers have a good answer.Last, in our digital disruption survey, we asked about the role that 3D printing might play in the trade promotion process. Figure 3 summarizes the results.
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