Sunny days: SAP shines in POI 2023 Enterprise Planning Vendor Panorama Report
The Promotion Optimization Institute honors SAP with six best-in-class distinctions for its trade and revenue growth management solutions.
AI in trade promotion management (TPM) isn’t just a futuristic concept; it’s a present-day reality offering tangible benefits.
In 2024, AI-driven TPM will redefine how consumer products companies plan, execute, and evaluate promotional strategies, boosting efficiency and effectiveness for improved marketing and sales.
Beyond optimizing product placements and supply chains, artificial intelligence will help CPG companies respond faster to market shifts and understand customers better to create personalized experiences.
But this transformation to data-driven, intelligent trade promotion management has its challenges, including consumer privacy and trust. In order to reap the benefits and ensure ethical and sustainable adoption of AI, CPG companies must tackle the risks.
Trade promotion management and AI
The amount of complexity in trade promotion management is daunting. From a multitude of promotion strategies to partner negotiations and a massive amount of data, consumer products companies face tremendous challenges.
For TPM, which has traditionally relied on historical data and human intuition, AI promises to be a gamechanger.
AI algorithms can perform deep, real-time analysis of vast amounts of data, including market trends, consumer behavior, and sales patterns. This helps consumer product companies more effectively allocate trade investment spend for better ROI and promotions that really resonate with retail buyers and buying desks.
AI also can predict the outcomes of various promotional strategies, allowing companies to experiment with different approaches and scenarios to determine the most effective one.
Moreover, AI-driven TPM can automate many routine tasks, freeing up employees to focus on strategy and creativity. Consider all the time-consuming manual work involved in promotion planning, often starting with copying previous promotions that seemed to perform well.
AI can automate the creation of promotion plans by copying previous promotions and making recommendations for improvements based on variables provided by the user. These variables could include maximum and minimum volumes, budget, profitability, price points, duration, and tactics.
Adding an AI assistant can support key account managers by streamlining access to promotional data and analytics while providing new ways to engage with their promotion plans. With an AI assistant, KAMs can add, adapt, amend and request planning recommendations.
Welcome to the future of trade promotion management. Find out what AI can do for you. Get the Incisiv playbook HERE.
AI risks for trade promotion management
While AI offers these TPM benefits, it poses several risks. There are seven key concerns weighing on the minds of consumer products executives as they look ahead to incorporating AI into their TPM strategy.
- Data privacy + security: Since AI systems rely heavily on consumer data, data privacy and security will be a top issue in 2024. Businesses must ensure they’re compliant with data protection regulations and that consumer data is handled responsibly.
- Algorithm bias: There’s a risk of AI algorithms being biased, leading to unfair promotional practices or exclusion of certain customer segments. Companies need to make sure their AI systems are transparent and fair, providing equal opportunities for all consumers.
- Integration with existing systems: Integrating AI into existing TPM systems without causing disruption will be a challenge. Businesses need to manage this integration carefully to avoid operational hiccups.
- Skills gap: As AI becomes more pervasive in trade promotion management, a skills gap may emerge. Employees will need training in AI and data analytics to effectively manage and interpret AI-enabled systems.
- Regulatory compliance: With AI still an emerging technology, regulatory frameworks are evolving. Companies must keep up and comply with, new regulations related to AI. This will be particularly demanding for international businesses.
- Consumer trust: Consumers have a lot of concerns about AI, which can erode trust. Companies need to be transparent about how they use AI to create promotional offers.
- Sustainability: AI in trade promotions carries the risk of inadvertent generation of promotions that lead to excessive waste from temporary in-store displays.
By addressing these risks head on, companies in the consumer products industry can harness AI to not only revolutionize their TPM strategies, but also to do so in a way that is ethical, sustainable and buyer-centric.
