Trade Spend Optimization
Trade spend is the money that brands dedicate to promote their products at retail locations. It is one of the top levers for CPG companies to improve revenue growth management efficiency and impact the P&L. Trade spend can come in many forms, ranging from volume pricing and product allowances to slotting fees and joint marketing campaigns. A clear playbook that defines trade spend strategy is critical to ensuring that your trade spend is creating value. L.E.K. Consulting combines our proven approach, advanced analytics and industry expertise to help clients develop trade spend strategies that drive real results.
A trade spend strategy is grounded in the development of a client-specific fact base, generated by a sophisticated analysis of historical trade spend outcomes, surveying of retail partners and competitive benchmarking.
|Trade spend diagnostic: Analyze trade spend, processes and effectiveness to measure ROI of top trade policies|
|Retailer survey: Interview customers (e.g., retailers) to understand appetite for various trade policies|
|Competitive benchmarking: Research and assess competitor trade strategies to evaluate and understand best practices|
|Strategy development: Identify gaps in current trade spend, and develop best-in-class trade strategies based on historical trade policy assessment, customer perspectives and competitive landscape|
An emerging plant-based frozen food brand approached L.E.K. when the company experienced significant revenue growth but was unable to attain profitability. L.E.K. evaluated the performance of historical trade events to determine the specific events that were most efficient from a unit lift and profitability perspective. With this trade spend fact base, L.E.K. recommended a trade strategy unique to each retailer, which allowed the client to recognize profitability.
A national agribusiness and food company wanted to better understand its historical trade performance and improve its future trade effectiveness. L.E.K. analyzed a set of about 50 trade events to determine the effectiveness of each category of trade spend, and then developed a strategic playbook with actionable guidelines on how to adjust future trade spend levels to improve trade effectiveness, drive incremental category growth and maximize system profitability.