Trade promotion is one of the key areas of collaboration between brands and retailers. When managed effectively, it makes a significant contribution to profitability while enhancing the trading partnership. Sadly this is all too rare: indeed most brands have little or no idea how effective – or ineffective – their trade promotions spend is.

This is particularly worrying as spending on trade promotions forms an ever-increasing proportion of the marketing budget for consumer packaged goods (CPG) companies; analysts estimate that typical expenditure is between 12% and 25% of sales revenue. Yet a string of studies has shown that between 50% and 75% of trade promotions are probably unprofitable. Such hemorrhage of profit would not be tolerated in any other area of the business.