How does consumer insight help model promotional tactics?

How do we effectively manage our trade spend? In the last 6 months Octopus has met with over 100 different organisations and there is clearly one dominant topic at the front of everybody's mind. For the average company a 5% increase in trade promotion efficiency will increase profitability by c.10% but after a decade of trying to bring spend under control nobody seems to be having much success - every year trade spend continues to grow. The central issue for Consumer Insights is that data analytics alone is clearly not solving the problem. The traditional approach of spending £100,000 a year measuring sku level price and promotion elasticity is simply not working. It is not consumer insight to know that a BOGOF promotion will increase sales by 337% that is is like knowing that a fast train is coming and that when it hits you it is going to hurt.

At Octopus we have come to the conclusion that to make efficiency savings you need to engage with the retailer and to do that you have to help the retailer manage their entire promotional strategy ...and to be able to do that you need the consumer insight to know how and what the shopper responds to as a whole - it is about understanding the shopper and the category not the sku and the promotion mechanic. We believe that Strategic Promotional Planning can do for trade spend what category management did for ranging in the previous decade.

Octopus.