Retail Leader - May/June 2018 - S5

AI in Trade Promotions Management
In promoting products, CPG companies have
historically made substantial investments with
retailers to boost revenue and/or increase
market share. Today, trade spending represents
more than 15% of CPG companies' total
revenue9 and continues to grow. Consequently,
spending volume has increased dramatically,
and trade promotions have become more
complex and harder to manage.

According to the Trade Promotions Management
Association's website, the industry has been
reluctant to adopt new technologies. Roughly
60% of companies still use manual processes
and spreadsheet applications or proprietary
software. Thus they lack real-time, accurate and
meaningful insights for planning, managing and
optimizing trade promotions.
AI and analytics can provide promotion-related
insights and guidance to channel managers,
category/brand managers and financial teams to
help allocate trade fund dollars more wisely and
alleviate margin erosion.

What is more, it currently takes the average
business user four weeks to understand if a
trade promotion was effective10. Yet 72% of
promotions fail to break even11, and many new
products fail.

Improve promotion precision with NLP
By layering on NLP, consumer goods
companies can facilitate experimentation
with trade promotions criteria. They can
verbally ask, for example, how results
could differ if a promotion is run in
July versus August. The answer is
immediate and does not require
using a PC or running massive
calculations. And they avoid
expensive risks.

NLP also recognizes natural, written language.
Using sentiment analysis, it can determine
whether consumer reactions to products are
positive, negative or neutral. Given the hordes
of posts consumers make daily on social
media, blogs, e-commerce sites
and other platforms (including CPG
companies' own social media sites),
manufacturers have a wealth of
information to draw from.

Given the time and money invested in Research
& Development, this feedback can go a long
way when it comes to trade funds marketing,
determining actionable price points,
tweaking items and recognizing
market voids that could be filled
by new products. And it can yield
results faster and at a lower cost.

MarketsandMarkets.com predicts
the NLP market will roughly double,
reaching $16 billion by 2021 at a
CAGR of 16.1%12.

Initiatives involving AI in trade promotions management*
37%
27%

30%
32%

Currently part of
initiative
Plan to incorporate in
next 12 to 24 months

Pricing optimization

Promotion optimization

* Figures are based on AI initiatives that are currently in the pipeline or are being planned in the next 12 to 24 months
9

5

 rade Promotions
T
Management
Association, 2017

10

 onsumer Goods Technology,
C
"Tech Trends 2017: Redefining
Trade Promotion"

11

 ielsen price/
N
promotion
survey, 2017

12

Source: 2018 EIQ Retail Innovation Survey

" Natural Language Processing Market by Type
Technologies by Deployment Type, Vertical &
by Region - Global Forecast to 2021," July 2017


http://www.MarketsandMarkets.com

Table of Contents for the Digital Edition of Retail Leader - May/June 2018

Contents
Retail Leader - May/June 2018 - Cover1
Retail Leader - May/June 2018 - Cover2
Retail Leader - May/June 2018 - 3
Retail Leader - May/June 2018 - Contents
Retail Leader - May/June 2018 - 5
Retail Leader - May/June 2018 - 6
Retail Leader - May/June 2018 - 7
Retail Leader - May/June 2018 - 8
Retail Leader - May/June 2018 - 9
Retail Leader - May/June 2018 - 10
Retail Leader - May/June 2018 - 11
Retail Leader - May/June 2018 - 12
Retail Leader - May/June 2018 - 13
Retail Leader - May/June 2018 - 14
Retail Leader - May/June 2018 - 15
Retail Leader - May/June 2018 - 16
Retail Leader - May/June 2018 - 17
Retail Leader - May/June 2018 - 18
Retail Leader - May/June 2018 - S1
Retail Leader - May/June 2018 - S2
Retail Leader - May/June 2018 - S3
Retail Leader - May/June 2018 - S4
Retail Leader - May/June 2018 - S5
Retail Leader - May/June 2018 - S6
Retail Leader - May/June 2018 - S7
Retail Leader - May/June 2018 - S8
Retail Leader - May/June 2018 - 19
Retail Leader - May/June 2018 - 20
Retail Leader - May/June 2018 - 21
Retail Leader - May/June 2018 - 22
Retail Leader - May/June 2018 - 23
Retail Leader - May/June 2018 - 24
Retail Leader - May/June 2018 - 25
Retail Leader - May/June 2018 - 26
Retail Leader - May/June 2018 - 27
Retail Leader - May/June 2018 - 28
Retail Leader - May/June 2018 - 29
Retail Leader - May/June 2018 - 30
Retail Leader - May/June 2018 - 31
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Retail Leader - May/June 2018 - 33
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Retail Leader - May/June 2018 - 35
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Retail Leader - May/June 2018 - 37
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Retail Leader - May/June 2018 - 41
Retail Leader - May/June 2018 - 42
Retail Leader - May/June 2018 - Cover3
Retail Leader - May/June 2018 - Cover4
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