When it comes to running a successful consumer packaged goods (CPG) company, effective planning is critical, and at the core of this planning is accurate sales and spend forecasting. With accurate trade promotion forecasting, you can allocate resources wisely, create more targeted marketing campaigns, and drive sales more efficiently.

The role of advanced trade promotion execution (TPx) software, like CPGvision, in gaining forecast accuracy cannot be overstated. These tools bring precision to planning promotions and forecasting sales on both an everyday and promoted basis by using data analytics and machine learning (ML) to predict future sales.

So, let’s explore how using trade promotion management (TPM) tools is not just beneficial but necessary for staying competitive. We'll also explore how our planning promotions and forecasting capabilities can transform your approach, helping your brand not just meet the market demands but also excel in them.

The importance of accurate forecasting in the CPG industry

Forecasting involves predicting the outcomes of activities to help businesses make better decisions. Trade promotions have a large impact on forecasting. Due to the high spikes in volume driven by trade promotions, accurately forecasting outcomes is crucial. This ensures that the organization is well-informed about how much product is needed and where it should be distributed. Accurate planning of promotions and forecasting is key to successful business operations in the CPG industry for several reasons:

• Inventory management: Getting forecasts right is essential for managing inventory. If you overestimate demand, you end up with too much stock, increasing storage costs and risking waste, particularly with perishable items. Underestimating demand can result in running out of stock, disappointing customers, and missing sales opportunities. Demand forecasts must be accurate down to the most granular levels of product and geography.
• Optimizing production: It's important to know the quantity and timing of production. Accurate forecasts help plan production efficiently, ensuring resources are not wasted and profitability is maximized.
• Planning promotions & marketing: Good forecasting aids in organizing promotions and marketing more effectively. By understanding upcoming demand trends, you can allocate marketing resources better, ensuring promotions are well-timed and targeted. You can also have the information needed to prioritize activities that are more efficient at obtaining your business objectives.
• Financial planning: Forecasts play a crucial role in financial planning. They are important for budgeting and accruals, managing cash flow, and shaping overall financial strategy, helping to allocate funds wisely and reduce risks.
• Adapting to market trends: Accurate forecasting allows businesses to be flexible and respond promptly to new trends and consumer preferences.

The impact of getting forecasts wrong can be serious. Poor forecasting can result in inefficient resource use and a weaker position in the competitive market——definitely something you want to avoid!

Traditional TPM and its limitations

In the past, trade promotion forecasting primarily depended on analyzing historical sales data manually, a method that often fell short in rapidly changing markets. According to a Gartner Report, about 59% of companies continue to use basic spreadsheets for this purpose, leading to challenges such as limited visibility, inflexibility, and difficulties in data analysis. Modern forecasting techniques have evolved to address these issues, utilizing advanced algorithms and real-time data to offer a more accurate and dynamic understanding of market trends.

This traditional approach has several drawbacks in today's market:

• No real-time data: Spreadsheets fail to provide up-to-date data, essential in a market where consumer preferences and competition change quickly. This makes timely strategy adjustments difficult.
• Prone to errors: Manual entry into spreadsheets can lead to errors and small inaccuracies can significantly impact the success of promotional plans.
• Scalability issues: With business growth comes more data. Spreadsheets struggle with large amounts of data, leading to potential performance problems and lower efficiency.
• Poor collaboration: Traditional trade promotion management (TPM), especially when using spreadsheets, typically lacks effective collaboration tools. This can create communication and coordination challenges among team members, crucial for successful promotion planning.
• Integration challenges: Integrating spreadsheets with other systems like ERP or CRM is often difficult. This can lead to disconnected data, making it hard to get a comprehensive view of updated forecasts and the impact of promotional activities on these as calendars change and evolve over the course of a year.

CPGvision’s advanced TPM: A game-changer for forecast accuracy

CPGvision's TPM redefines planning promotions and forecasting in the CPG industry. At the heart of CPGvision's TPM is its use of advanced analytics and artificial intelligence (AI). This approach surpasses traditional methods by accurately predicting base and uplift factors. We rely on data science for precise predictions, moving away from the slower, error-prone method of manual input by sales staff. This results in more accurate forecasts, saves time, and reduces errors. And unlike our competitors, you don’t have to purchase our TPO to integrate our AI-driven forecasts into TPM.

Finally, traditional promotion management often misses the mark in forecasting complex market dynamics due to a lack of advanced data science. CPGvision's TPM addresses this by offering sophisticated analytics and AI insights, speeding up the process and improving the accuracy of forecasts for both base and promotional volumes.

Key features of CPGvision's TPM solution

For those in the CPG industry, CPGvision offers a practical trade promotion planning and forecasting capability that offers a unique approach, setting itself apart by forecasting both non-promoted and promoted volumes. This is a significant advantage over many traditional TPM systems. Let’s explore what this feature offers:

• Holistic forecasting: Unlike other systems that require manual input for promotion volumes, CPGvision automates this process. It predicts both non-promoted and promoted volumes, giving sales teams a comprehensive view of expected sales. Your sales team will see an expected ROI on every promotion as they plan! This leads to more accurate planning and stronger decision-making.
• Easy-to-use promotion planning: This user-friendly feature guides users through setting up promotions, making it easy for anyone to use, regardless of their technical skills. Copying over promotions you want to run again is a breeze, and one of the shortcuts that enable your users to gain productivity.
• Data-driven accuracy: This system uses historical sales data, market trends, and consumer behaviors to make accurate forecasts. Unlike many of our competitors who only model based on syndicated POS data, our models are not source-constrained. We can incorporate macroeconomic data, omnichannel data, and any other source that is key to understanding your business drivers.
• Real-time insights: This keeps up with an ever-changing market by offering real-time monitoring and allowing teams to adjust their strategies and stay agile as needed.
• Integrated with sales strategies: This feature isn’t just a standalone tool; it integrates with your overall sales strategy and ensures that promotion planning is aligned with your broader business goals.
• Empowering sales teams: With predictive insights about both non-promoted and promoted volumes, sales teams can plan more effectively. This leads to better-prepared promotional campaigns and potentially higher sales outcomes.
• Integrates into important systems: Demand planning is a key receptor of CPGvision’s forecasts. 

How to measure the impact on forecast accuracy

Improving the accuracy of sales forecasting is crucial as it positively impacts various aspects of your business, including human resources, inventory management, supply chain, warehousing, sales, marketing, and financial operations. Therefore, it's important to prioritize sales forecasting accuracy from the start. 

Measuring the impact of our TPM on your forecast accuracy is a good idea as it will enable you to maximize the effectiveness of your trade promotions, optimize resource allocation, enhance customer satisfaction, and maintain a competitive edge in the market. Here are key steps and metrics commonly used to measure forecast accuracy:

• Understand the forecasting context: Before measuring accuracy, it's important to understand the context of the forecast. This includes the type of data being forecasted, the forecasting horizon (short-term vs. long-term), and the specific goals of the forecast.
• Collect historical data: Accurate measurement requires historical data. This data should be as close as possible to the conditions under which the forecast was made.
• Track plan vs. actuals for sales: This comparison helps in identifying discrepancies between what was predicted and what actually occurred. By analyzing these differences, you can understand the accuracy of your sales forecasts and identify areas for improvement.
• Track plan vs. actuals for spending: This involves comparing the allocated budget for various activities, such as marketing or production, against the actual amount spent. This comparison helps in understanding how well the spending was managed and whether the forecasts were realistic and aligned with actual spending patterns.

By following these steps, you will be able to measure the improvements in your forecasting accuracy effectively. This is a great way to evaluate the improved performance that you will see from using a TPM like CPGvision.

We can help your business revolutionize your forecasting accuracy 

As we've explored throughout this blog, the integration of trade promotion forecasting into your CPG strategy is not just a step forward—it's a leap towards transformative growth and efficiency. 

With CPGvision, you gain access to a suite of tools that are specifically designed to enhance your promotional strategies, forecast accuracy, and deduction management all while increasing productivity. Whether you're looking to refine your current approach or overhaul your promotional planning entirely, CPGvision has the solution.

Don't let the complexities of planning promotions and forecasting hold you back. Our team is ready to help you unlock the full potential of your promotional activities and drive significant revenue growth. Contact us today and discover how our trade promotion software can enhance your success.