Afs tpo 2016 user conf

1. Introducing
Trade Promotion Optimization
2016 AFS User Conference

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Alex Ring, VP TPM Product Management Retail & Foodservice
Alex has 35 years’ experience creating and delivering TPM and TPO software and
services to the retail and food service CPG industry.
Alex was Founder and CEO of Synectics Group, which is now a part of AFS.
Speaker(s)

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Agenda
 TPM vs TPO
 TPO Analogy
 TPO Benefits
 How TPO works
 New AFS TPO version 2!
 Questions

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The process of managing all tactical
day-to-day trade promotion activities.
TPM covers the entire promotion’s life cycle, including
forecasting, planning, budgeting, and settlements.
TPM: Trade Promotion Management
TPO: Trade Promotion Optimization
The process of utilizing goals, constraints
and predictive analytics to create
better trade promotion strategies.
Definitions: TPO vs TPM

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Analogy
Adding TPO to TPM
is like
Adding Google turn-by-turn Directions to a map

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Map TPM
You already know where you want to go,
and you know how to map your route.
Use the map to create your own route.
You already know the specific promotions
you want to create.
Enter promotions in the TPM solution.
Google Directions TPO
Give Google start and end locations, and let
Google give you turn-by-turn directions.
The route is optimized for speed or distance
and accounts for traffic and tolls.
Over-ride the route as needed.
Give TPO your goals and constraints, and let
TPO show you possible trade calendars.
The calendar is optimized for revenue,
volume or profit and stays within constraints.
Use TPO to improve your trade strategy for
your top volume customers.
Expectations

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TPM TPO
Overall assumption You want help know what promotions
you want to run
You want TPO to show you potential trade
calendars
How to use the tool Enter only the specific promotions that
will be executed at retail
Enter the budget, business rules, and ALL
of the potential promotion options
Challenges Creating scenarios can be time
consuming, with trial-and-error
approach. Only as good as the
promotions you create.
Stake holders must be willing to invest time
into TPO and open to changing the trade
strategy.
What’s the goal? Manage all aspects of the trade
promotion life cycle for all products and
customers, from beginning to end.
Create better trade strategies for customers
and brand/products that materially affect
your business. (80/20 rule)
Benefits Transactional efficiencies, work-flow
controls, and financial reporting of
incurred and net liability
Determine what trade strategy maximizes
your goals (profit, revenue and/or volume)
while staying within all your business
constraints.
Adding TPO to TPM

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Opportunity cost of only using TPM
Top 10 customers: typically 60% to 80% of your sales, trade budget and profitability
Maintain sales and
reduce spending as a percentage of sales
Value
Annual Trade Spending on top 10 $20,000,000
Conservative % improvement 5.00%
Conservative payback opportunity $1,000,000
Aggressive % improvement 10.00%
Aggressive payback opportunity $2,000,000
Hold spending constant and
increase dollar sales
Value
Annual Dollar Sales of Top 10 $100,000,000
Estimated Gross profit margin 35%
Conservative % increase in sales 2.00%
Conservative payback opportunity $700,000
Aggressive % increase in sales 4.00%
Aggressive payback opportunity $1,400,000

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5. Strategic learning &
calendar used in TPM
1. Load Corporate
targets
and guidelines
2. Customer Planning
With
Optimization
3. Customer
Plan
Work-flow
4. Incremental Fund
Analysis & Approval
How TPO works

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What is the expected impact on volume if we run a 4 week $3.29 TPR?
… a 1 week $2.99 Ad & Display?
Price Reduction
VolumeLift
Feature & Display
Display Only
Feature Only
TPR Only
Integration to Predictive Analytics

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Business Impact
Feature
&
Display
Feature
Only
Display
Only
Which combination of events will have the greatest impact on volume?
… on
revenue and profit?
AFS TPO Enable Balanced Decision Making
Focus on highest value opportunities; start small, law of diminishing returns

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TPM
Solution
TPO: Strategy
TPM: Tactics
• Fewer details
• Easy What-if
• Macro changes
• Very specific
• Financial record
• Micro changes
AFS TPO
TPO vs. TPM

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AFS TPO Dashboard:
What-if Plans vs. Budget

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AFS TPO Dashboard:
View all your What-if events

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What-if Event Planning

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Learn from history

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OPTIMIZE FOR
PROFIT, REVENUE,
AND/OR VOLUME!
AFS TPO actually builds the optimized deal calendar!

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Manage Incremental Fund Requests

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Business Rules Include:
 Always Promote Together
 Do Not Promote Together
 Seasonality Windows
 EDLP Or Non-promoted Base
 Green : Preferred weeks
 Red X: Don’t promote weeks
 Pre-gap and post-gap minimums
 Forward-buy effects
AFS TPO Planner builds the Optimized calendar

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Example: Scenario Detail with five separate report tabs
Report views in Excel

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Thank you
Q & A
Next Session: After the break,
A Space Odyssey, in the Grand Saguaro North