Small Company-based retail promotions management systems focus on price-based promotions. The need to improve demand forecasting and supply chain management requires that retailers rethink the definition of promotion and move beyond price as the primary criteria for promotions identification.
Traditional Promotion Management has need to change the overall scenario of ERP MODEL
Redefining Promotion to Improve Demand Planning
Retailers continue to invest in technology and process to improve demand planning. Because promotions are a critical ingredient of demand, retailers need to better leverage promotions as an input to the demand planning process.
Traditional thinking about promotions is centered on promotions as a change in price or product offering to induce the customer to buy now. In this digital age, retailers have many means to induce the customer to buy now. The pervasive and immediate nature of Twitter, blogs, celebrity endorsements, product placements in movies and games, search engine optimization, and web content positioning enables these digital tools to motivate the customer to make a purchase. Marketers may argue that some digital is advertising, not promotion. The immediacy of these digital tools and the potential for viral social impact mean that any advertising could have the buy now effect.
In the context of demand planning and supply chain management, a promotion needs to be defined as any activity (corporate or external) which induces the customer to buy now or in the future.
Relying on more promotions: The key to better utilization of promotional data in demand planning is better data capture for promotional events. Retailers undertake many efforts that cause customers to buy now without realizing the promotional nature of the effort. Start with the assumption that a promotion is anything that induces customers to buy (regardless of timing) and invite all applicable stakeholders to the table. Include marketing, advertising, e-commerce, stores, merchandising, brand management, community relations, legal, supply chain, and vendors. Not all stakeholders will support this broad definition of promotion because it runs contrary to established corporate structures. Senior leadership support is critical to this paradigm shift.
Heights of promotional data: Enhance technology, processes and master data so that the much broader range of promotions is systematically captured and used as inputs to demand planning and supply chain management.
Analyze, improve and communicate: Develop and enhance reporting and analytics to determine relationships between promotional activities and demand. Use this information to improve demand planning and determine which promotions are relevant to demand planning.
Retailers have long invested in promotions and promotions management systems to drive sales and induce the customer to buy now. The number, variety and immediacy of promotional tools have increased with the growth of digital media. Systematically capturing a broad range of promotions and enhancing systems to include this new promotions data in demand planning will help retailers to better respond to demand and to increase sales. I look forward to your comments and views on this new approach to retail promotions.