For consumer packaged goods (CPG) companies to succeed, they must make large investments in trade management and customer planning. Strategy& conducts a biannual study of CPG companies to understand their trade agendas—and these agendas’ effects on companies’ bottom lines. We surveyed 21 leading CPG manufacturers and found that 85% believe their current spending on trade management is inappropriately high. More than half say their current trade funding program is ineffective. How can companies break out of this rut? We identify shared characteristics of leaders in customer planning and trade management. Then, we outline the nature of ROI companies can expect by changing their approach to trade.

1. Benchmarking study
Customer planning
and trade management

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Benchmarking study
Customer planning
and trade management
About the study
21 leading CPG
manufacturers
annual
revenues $1bn
- $30bn
senior executives of funding,
customer planning, and trade
spending management
85% of companies believe they spend far too much on trade and trade
management, and are unhappy with the quality of tools and systems
available to manage their investment
Marketplace leaders …
… are as likely to be found in the food
and beverage space as the non-food
and beverage space
… are as likely to be small companies as
they are large companies
… had best practices in common that
helped them outperform their
competition
a range of
sectors

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Areas of concern among CPGs
Funding allocation
More than 50% of surveyed companies feel their trade funding
program is ineffective
Customer planning
70% of participants report they are unsatisfied with their current
approach to customer planning
Systems and tools
Respondents are largely dissatisfied; 70% unsatisfied with current
planning and execution tools and 55% unsatisfied with
current trade tools
1
2
3
4
Spending efficiency/effectiveness
85% of survey respondents feel that current spending is inappropriately
high for the long-term health of their business

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Rewards of leadership
Leaders in customer planning and trade management show
stronger financial performance
Annualized total shareholder return, 2009–12
Leaders All others
13.9%
11.5%
+21%
TSR
Average Leader ROI
Improvement over
Last 2 years:
6pp
(percentage points)

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Key takeaways
• Companies are allocating the focus required to build
robust base-volume plans in addition to incremental,
leading up to full-volume plans; they’ve also adjusted
field sales incentives to include net sales and margin
metrics to focus on delivery
• Companies are increasingly shifting their focus toward
measuring and tracking ROI, and then employing
concerted efforts to improve the effectiveness of their
spend
• Companies are moving toward objective, performance-
based criteria, and are becoming more transparent about
their intentions with customers to increase collaboration
• Companies have invested in a comprehensive suite of
systems and tools to enable end-to-end customer
planning and trade management
Funding
allocation
Customer
planning
Spending
efficiency /
effectiveness
Systems
and tools

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10%10%
15%15%
Improved ROI for leaders
Typical trade spend
improvement opportunity
Over a three-year period
Example improvement drivers
Eliminate unprofitable promotions
Repeat profitable promotions
Decrease forward buy and diversion
Better target promotions by account,
category, and geography
Improve customer interactions via
fact-based dialogue
PercentageofSpending
Low Medium High
25%25%

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Our expertise at work
Strategy& has worked with 11 out of 15 of the top CPG companies to
improve end-to-end capabilities, from strategy to implementation
We have a 50+ person team dedicated to building trade promotion
business and systems capabilities
Copyright and Definition
© 2014 PwC. All rights reserved.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details.
Disclaimer:
This content is general information purposes only, and should not be used as a substitute for consultation with professional
advisors.
To read the full report, click here
To learn more about our TPE offering, visit:
strategyand.pwc.com/tpe