History of Trade Spending

In a 1971 effort to halt inflation, the Nixon administration froze wages and prices for 90 days. He froze them again in 1973. Manufacturers raised prices before the freezes—then didn’t lower them. Instead of reducing prices, they began giving discounts to retailers that could be passed on to consumers for limited times.

In the mid-80s, retailers began taking control. They launched programs aimed at boosting volume—and the dollars stores would earn as products passed through their shelves. This was the birth of today’s trade promotion programs and the fees retailers collect for them. Trade promotion costs have risen steadily since the late 2000s.

Today, trade spend is still a crucial aspect of doing business, but it helps brands manage their business rather than hurt them. The purpose of trade spending today is to encourage promotion via discount, secure additional distribution, or shelf space, or to drive additional volume. It can be in the form of a percent discount from list price, an amount per unit, or a fixed or lump-sum payment for merchandising provided by the retailer.

What is TPM Software?

A TPM software solution enables businesses to better plan and operate in all aspects of trade.

Adesso’s Flamingo Trade Promotion Effectiveness (TPE) solution helps you manage and control spending, as well as plan and forecast. Our TPM software solution gives you visibility into your spending, accountability and control, offline scenario planning, and real-time reporting and analysis. Our Cloud-based model helps you relax and take charge of your trade spending.

Adesso’s Flamingo Trade Promotion Management solution combines this standard system, which is built upon the industry trade process and best practices, coupled with our unique System Effectiveness Services that together dramatically improve our clients’ trade promotion spending and effectiveness.

When It Comes To Trade Spending, All Retailers Are Not Created Equal

We have been big proponents of the concept of “Consistent Complexity” when it comes to CPG manufacturers dealing with the trade.

The premise is while trade spending is complex, that complexity is the same regardless of the size or type of CPG manufacturer. So while you can’t use the same trade promotion approach with every retailer, most CPG manufacturers have to deal with the same retailer the same way.

For example, Publix uses BOGO’s. Therefore, different CPG manufacturers can be helped by trade experts familiar with the different accounts and how they handle trade spending.

However, there is also the fact that while all retailers are looking to take as much of your trade dollars as possible, there is a big difference between how retailers extract those dollars. Therefore, the time and effort spent maximizing the effectiveness with your trade dollars doesn’t always match up with your top sales accounts. For example, Walmart is EDLP. Not much trade promotion management issues there. However, go to the major retailers in the northeast and deal with Wakefern (Shoprite), Stop N Shop, Keyfood, A&P, Pathmark, CNS among others and you deal with a myriad of overlapping trade promotion programs, diverting, double billing for the same promotion etc., that makes the effort, money, and approach extremely complicated to manage, to control and to plan for the future.

Therefore, you need both a TPM solution that can handle all these variants and trade experts with experience to help navigate you to TPE – trade promotion effectiveness.