But when costs and inflation increase, such promotions become particularly valuable, relieving consumers’ wallets while maintaining competitiveness and fostering lasting customer loyalty. The approach is then narrowed down to short-term price reductions – where regular shelf prices of selected items or entire shopping baskets are significantly marked down for a predefined campaign period complemented by extensive advertising.

Understand the True Purpose and Impact

Thanks to product designers and managers in the consumer products industry and those responsible for grocery retail marketing, many different promotion types have emerged in recent years. Even though there is a high number of variants and different mixed forms, promotions can be broadly categorized into three main types:

• Filling up (household) stock encourages higher-than-normal purchase quantities for each shopping trip by offering multipacks, product bundles, larger packaging sizes, and refills.
• First-time purchases compel consumers to try new or alternative products with trial sizes that feature smaller quantities than the standard product.
• Traditional price-off offers promote a standard size product at a discounted price for a specific period with the support of a marketing campaign. They can be combined with other promotion types, including product bundles and multipacks.

Close Interactions and Dependencies

If you look at the range of products advertised through promotions, it’s clear that branded products dominate leaflets, online offers, and flyers distributed by large grocery retail chains. In fact, the proportion of promotions with branded products often reaches 90% or more in many established markets.

Considering these factors, consumer goods companies and grocery retailers must cooperate up to a certain level. Grocery retailers benefit from established brands because they can help ensure a broad group of consumers will notice the advertising and perceive promotional items as attractive. Consumer products companies, in turn, need grocery retailers to place new products at the point of sale and secure a competitive position for their core brands.

Although both consumer goods companies and grocery retailers are interested in the success of jointly planned promotions, their actual objectives differ significantly. While retail companies are primarily running promotional campaigns to increase visit or purchase frequency and optimize cross-selling initiatives, consumer goods producers usually view expanding or securing market share as their primary goal.

Acknowledge the Importance of Technology

Given the critical nature of promotions, the right technology can help consumer products companies and grocery retailers realize mutually beneficial and optimized outcomes to increase their share of wallet, margin, and overall revenue. For example, technology can help streamline the promotion process, improve planning and execution, and measure campaign effectiveness.

Working with leading consumer products companies and grocery retailers worldwide, 51·çÁ÷developed and continues to update a portfolio of solutions that can address market requirements, business challenges, and ever-evolving needs and expectations.

Price Promotions Solutions for Grocery Retail

Retailers using 51·çÁ÷solutions are well-equipped to be able to address complex challenges in the promotion management process. They can increase inventory turnover and reduce food waste by leveraging real-time, data-driven insights into the evolving market landscape, supporting the promotion process, and driving smooth, error-free interactions.

With the 51·çÁ÷Promotion Management application, which is part of , retailers can plan, manage, and analyze their promotional events. The application helps streamline their promotion processes, access real-time data, and accurately evaluate results. In addition, it can gather data and integrate with the demand data foundation module of 51·çÁ÷Customer Activity Repository to help drive data integrity across multiple applications.

Retailers can use enhanced planning capabilities from 51·çÁ÷Customer Activity Repository to help optimize promotion effectiveness and profitability. They can create coupons, define promotional advertising vehicles, specify promotional offers by location and language, and manage promotions by type, tactic, and incentives. Furthermore, they can exchange data across various 51·çÁ÷applications and support what-if simulations to help identify scenarios predicted to yield the best financial performance.

Additional capabilities that further complement the promotion process in grocery retail include:

• Omnichannel price and promotion service that can enable retailers to enhance the shopping experience with consistent pricing across all sales channels.
• Retail promotion analytics that can provide valuable data-driven insights to help guide future decision-making and promotion optimization strategies.

Price Promotions Solutions for Consumer Products Companies

For consumer products companies, 51·çÁ÷solutions help support promotion management and trade spend, which, in total, comprise the majority of business revenue. They can provide a tailored approach to promotion planning, execution, and control – enabling increased focus on revenue, volume, and profitability for themselves and their retail partners. Modern analytics capabilities are also included, such as statistical forecasting, optimization, post-evaluation, and innovative machine learning tools.

Take, for example, the solution. It can facilitate the design of promotional plans, fund management, and claims settlement while offering performance analysis to help gauge the effectiveness of trade promotions.

The solution can allow businesses to shift their focus from short-term measures of promotion effectiveness to longer-term, mutually defined targets, including category growth, sustainable volume growth, and margin growth. Additionally, it can empower sales leaders to sense and predict potential risks to revenue, volume, and profitability in real time, align their strategies with retailers’ broader business objectives, and make fact-based decisions for activities best aligned with targets.

Unlock the Full Potential of Every Promotion

In today’s competitive landscape, the ability to decode and master promotions is a strategic imperative. With the right technology and solutions in place, consumer product companies and grocery retailers can unlock the full potential of their promotions, driving revenue, enhancing margins, and securing their place in the market.

Dirk Dreisbach is chief business enterprise consultant for Business Transformation Services, Consumer Products and Retail Industries at SAP.
Dmitry Melnik is a vice president at SAP.

The answer comes down to having the right enterprise resource planning (ERP) system. Large volumes of data must be handled to proactively recognize shopping habits, make the right decisions about the size and selection of assortments, and streamline processes end to end. Or more succinctly, you need the tools to do everything it takes to satisfy customer needs consistently, strategically, and intelligently.

By modernizing the ERP foundation, you can gain an extraordinary advantage when taking on three industry trends that can be critical to long-term resilience against expanding competitors and the ability to wow every customer.

Capture Customer Interest with the Right Assortment

Grocery retailers constantly ask themselves how to attract customers, keep them, and service them cost-effectively. The key is understanding the many questions that run through shoppers’ minds before, during, and after they visit the physical store or e-commerce site.

Most grocers try to capture some of this information through membership or loyalty card programs. But making sense of this information to guide customers along their journey through every aisle requires a modern ERP with embedded analytics, visualizations, and capabilities that connect the ERP system to business and point-of-sale applications. In return, you gain a 360-degree view of each customer while managing your subscription program, an increasing set of receivables, complex pricing, and product bundle offers.

Stand Out with Unique Customer Value

With traditional and nontraditional competitors expanding into new regions and market areas, differentiation strategies naturally move up on the list of business priorities. But standing out among mom-and-pop stores, discount and exclusive retailers, large national chains, and digital retailers is becoming increasingly challenging without the visibility and foresight to plan production capacity, source materials, and manage logistics and inventory in real time.

The key to navigating the increasingly crowded market space is pulling together a comprehensive physical inventory movement overview to help detect slow-moving and unprofitable items and manage master data. With a modern ERP, you can integrate a wide selection of solutions into a single source of truth to help analyze sales performance and trends, optimize the assortment structure, and source the right products for each season. In addition, a universal journal can be created to set the foundation for simplified data structures and deeper insights into your SKU portfolio.

Seize the Moment with Omnichannel Strategies

The concept of e-tailing has gained interest among grocery retailers. Although customers prefer to shop for food weekly in brick-and-mortar stores, the fact that more people are buying perishable goods online indicates where the industry is heading in the future.

A modern ERP can help grocers prepare for this trend by connecting to sources of information such as SKUs, prices, and availability by store and distribution center. The technology creates a framework to keep the e-commerce site and mobile app up-to-date to prevent stock-outs. In addition, management can define quality parameters for choosing fresh produce, help ensure SKU availability, and coordinate order fulfillment and delivery.

Ready to Shape the Future of Your Grocery Retail Business?

For a more in-depth look at how you can apply these three trends with our modern ERP, the 51·çÁ÷S/4HANA Retail solution, read the three-part blog series, “.”

Dirk Dreisbach is chief business enterprise consultant for BTS Consumer Products and Retail Industries at 51·çÁ÷Germany.
Dmitry Melnik is global vice president for 51·çÁ÷S/4HANA at SAP.