Trade Promotions Management: Getting the Most from Every Promotion

Trade spend is one of the largest discretionary costs in consumer goods, and one of the least well understood. For many manufacturers it sits second only to cost of goods, yet the plan usually lives in a spreadsheet owned by a commercial team while the consequences land squarely on supply chain. The pattern is familiar: volume arrives faster than expected, the factory cannot react in time, the promoted line goes short while slow movers fill the warehouse, and the post-event review never quite explains what happened.

## Why promotions destabilise the supply plan A promotion changes demand in three ways at once. It lifts the rate of sale, it pulls purchases forward from future weeks, and it shifts the mix between products and pack sizes. Most planning processes model only the first of those. Uplift gets applied as a percentage to a baseline, the baseline itself is rarely agreed, and the forward pull and the post-event dip are left to be discovered later. The result is a forecast that looks reasonable in aggregate and is wrong everywhere that matters.

## The questions every promotion has to answer A promotion is not properly planned until the business can answer all of these before it goes live:

• How much incremental volume will it generate, against which agreed baseline?
• When will that volume actually land, by week, by customer and by depot?
• Do we have the capacity, materials, packaging and transport to serve it?
• What does the dip after the event look like, and which customers bought forward?
• Did it pay back once funding, waste and markdown are included?

## Planning the uplift, not just the price Credible promotion planning separates the baseline from the increment. The baseline is what would have sold anyway, and it should come from a statistical forecast that already understands trend and seasonality, not from last year plus a judgement call. The increment is then modelled explicitly: price elasticity, display and feature effects, cannibalisation of sibling lines, and pantry loading by loyal shoppers who simply moved their next purchase earlier. Those are different mechanisms with different shapes, and treating them as one percentage is why promotion forecasts miss.

## Joining commercial and supply planning The most common structural failure is that commercial teams plan in monthly value while supply plans in weekly units. Neither can see the other's constraints. A promotion agreed at a monthly case volume can still be impossible to make in the week it is needed if the line is already committed, or if a component has a four-week lead time. Closing that gap means one shared promotion calendar that carries both the commercial assumptions and the operational implications, visible to both teams before the funding is signed off.

## Measuring what actually happened Post-event analysis closes the loop, and it is where most businesses leave value on the table. Comparing the promoted weeks against the plan, and against a re-forecast baseline, shows whether the volume was genuinely incremental or borrowed. It also exposes the customers who bought forward, the lines that were cannibalised, and the waste that came from over-committing on short shelf-life stock. Each event should leave behind a better elasticity assumption for the next one, held in the system rather than in someone's memory.

## Where sofco fits sofco plans promotions and the supply response in the same model, so the uplift, the capacity check and the post-event dip are one conversation rather than three. Trade promotion planning sits on the same demand forecast that drives supply, which means the factory sees the peak as soon as commercial does. Explore trade promotions management, see how the underlying demand plan works, or book a demo to walk through a live promotion cycle.