SAP Trade Promotion Management

RKT Live Expert Session – BW

TPM Core Consulting Team

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 Participants

Prerequisites:

Knowledge of data extraction and data staging in BW

Study of the TPM introduction content in the RKT Learning map

Target Group:

BW/SEM Consultants for TPM Ramp up customers

BW/SEM Consultants interested in the TPM process

Duration: ~1 hour

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 Session Objectives

After this session you will be able to:

understand the Trade Promotion Management business process

illustrate SAP’s five step process of TPM

set up and use the BW business content for TPM

explain the data flow for both master and transaction data

understand the identification of R/3 data with CRM data

know where to find documentation

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 Session Content

Session Content:

TPM business process – Overview

SAP’s view of TPM – the five step process

TPM business content in BW

InfoSource, InfoCubes and update rules (incl. routines)

Master data and transaction data

Data flow: plan data and actual data

Required components / system landscape

System demo

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 TPM - Definition

TPM
Trade Promotion Management

The solution supports consumer products

companies‘ trade promotion spending and
volume planning business processes in a
customer-centric, connected environment.
This closed loop, fully connected solution
provides users the ability to plan, sell,
deliver, execute, validate, track, monitor,
pay, reconcile and evaluate the promotion
and volume plans.

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TPM is an integrated process not a product.

The solution supports CPG companies trade promotion spending and volume planning business process in
a customer centric connected environment.
This closed loop fully connected solution provides users the ability to plan, sell, deliver, execute, validate,
track, monitor, pay reconcile and evaluate the promotion and volume plans to increase sales, volume and
evaluate the efficiency of trade spending.

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 Make sure you understand the distinction!

Retail Consumer

CP-INDUSTRY

Marketing Activities

Consumer Activities
Trade Promotions
Consumer Promotions Media Campaigns

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The two major goals of CPG companies marketing activities are on one hand, to increase brand equity,
brand awareness, market share and on the other hand sales volume of the manufactured products. All
marketing activities are embedded into a company-wide, global marketing strategy that is implemented
using three types of marketing events: Trade Promotions, Consumer Promotions and Media Campaigns.
We combine Consumer Promotions and Media Campaings with the term “Consumer Activities”.
Trade Promtions are always directed through the retail channel, i.e. through the trade. These promotions
take the form of discounts offered to the retailer or fees for placing the goods at the end of an aisle.

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 TPM Business Case

Marketing Spending

1978 TODAY
Trade Promotions 5% Trade Promotions 13%

Consumer Promotions 4% Consumer Promotions 4%

Consumer Activities
Advertising/Media 6% Advertising/Media 5%

Of a Global CP Sales of 1 Trillion $ !

Source: Donnelley Marketing and Andersen Consulting Analysis and Survey Responses

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Today Consumer Products Manufactures spend a tremendous amount of money on Trade Promotions. On
average, 13-16% of a company’s annual sales revenues go towards promoting their products through the
retailers with various merchandising events in-store, e.g. displays, features, reduced prices, shopper card
discounts etc.
Many companies today manage this expense via a complex process incorporating manual and automated
processes, in many instances relying on Word and Excel based templates to input and analyze data
throughout the work flow. As you can expect, the alignment and timely transfer of information within the
organization is critical to making profitable decisions and being able to manage all products in a consistent
and viable manner. This is hard to do with the large number of unconnected documents.
Considering the Consumer Products Manufactures account for over $ 1 Trilllion dollars in sales, the
amount of money being spent on Trade Promotions is significant, estimated $ 130 – 160 billion)

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 Implications of Inefficient and Ineffective TPM Solutions

Only 16% of Trade Promotions Are Profitable 1

91% of Manufacturers Feel TPM $’S Are Inefficient 2

85% of Manufacturers Feel They Are Ineffective 2

81% of Manufacturers Feel They Get Poor Value 2

Manufacturers Estimate That 30% of TPM Dollars Go Straight to the

Retailers’ Bottom Line 3

TPM Related Activities Account for 25% - 30% of a Salesperson's

and Brand Manager’s Time 4

Manufacturers wrote off deductions equal to 8.5%

gof their revenue in 2000 5

1 Economist, 2 Progressive Grocer, 3 Ac Nielsen Supermarket Business, 4 Buzzel at Wharton, 5 Cannondale 2002 study

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Although an enormous amount of money is at stake, CPG manufactures generally are not able to analyze
the effectiveness and to judge the true efficiency of their trade promotions.
Therefore, CP companies feel quite often that this money is spent very inefficiently.

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 TPM Basic Questions

How are the funds being spent?

What is the most

?
effective use of the
funds? What is the return
on investment?

What uplift are we

getting? Which programs
provide the greatest
value?

Which customers perform the best?

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 The TPM Business Challenge

Trade expenses not being utilized for greatest impact

Sales volume forecasting not based on historical fact

Budgets, both volume, and spending are assigned with little

bottom-up input

Inaccurate volume forecast leading to multiple production and

supply problems

Deductions balances growing

Lack of remote field sales planning restricts account managers'

flexibility and mobility

Too much time spent planning and loading numbers

The complete TPM process is not systematically integrated

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Today the manufacturer faces the issue of leveraging multiple sources of data like R/3, legacy systems,
mobile systems, and third party data to plan what amounts to between 13 and 16% of the entire Profit &
Loss statement. You need a structure that is easily integrated in your multiple systems to plan, control,
execute, and evaluate your entire Trade Promotion Management (TPM) process. Additional challenges
include the need for an online and an off-line component: your sales force most likely plans in a hotel
room.
The TPM process includes five basic steps: headquarter planning, field planning, sell-in & negotiation,
retail execution & validation and evaluation. The structures created need to be integrated to a number of
back-end systems as well as pushed out to the field to support bottoms up volume planning. Integrating the
structures, hierarchies, and pricing can amount to an investment in itself. SAP supports the end-to-end
business process of Trade Promotion Management. The following scenario describes the extent of the
business process including numerous roles that are supported in the SAP solution.

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 Trade Promotion Management

Headquarter:
PRE- Strategic sales and
promotion planning
Evaluation and
analysis

POST-

Field planning

Retail
execution and
validation

Customer sell-in
and negotiation

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A 5 Step closed loop process was created to describe how the process is carried out in many CP companies.
Not all companies follow this model and there is no defined ‘best practice’
Headquarter Planning
Establish Consistent Volume and Spending Objectives for the Entire Organization
Provide HQ Planned Deals and Promotions to Field Organization
Establish Consistent Volume and Spending Objectives for the Entire Organization
Provide HQ Planned Deals and Promotions to Field Organization
Consensus Plan (One Number Plan) Top Down, Bottom Up, Middle Out
Sales Budgeting, Volume, Revenue, Profitability, Spending Planning
Deal Creation – Products, Customers, Timing, Spending Rules

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 Trade Promotion Management

Headquarter:
PRE- Strategic sales and
promotion planning
Evaluation and
analysis

POST-

Field planning

Retail
execution and
validation

Customer sell-in
and negotiation

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Field Account Planning

Comprehensive Planning Tool for the Account Team
Volume and Quantity Based What–if Planning
Online and Offline Capabilities
Pre-analysis of Prior Events
Event Planning: Volume and Spending Forecasts
Sales Planning: Total Volume Sales Forecasting
Sell-in & Negotiation
Fact-based Presentation Materials for the Account Team
Flexible Tool to Capture and Communicate Changes Driven by Customers
Fact-based Proposal Generation
Promotion Driven Demand Planning Integrated to Supply Chain Planning
Flexible Contract Management

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 Trade Promotion Management

Headquarter:
PRE- Strategic sales and
promotion planning
Evaluation and
analysis

POST-

Field planning

Retail
execution and
validation

Customer sell-in
and negotiation

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Retail Execution, Validation & Settlement

Pricing Conditions Connected to Order Entry Resulting in Accurate Invoicing
Ability to Capture In-store Observations for Sales Rep Execution
All Data Sent Up-stream for Analysis
Accurate Assignment of Pricing Conditions to Customer Orders
Capture Observations of Account Performance
Payments to Retailers via Release of Funds by Account Manager
Pre & Post Evaluation & Analysis
Key Performance Indicator Reporting
Integration from Syndicated Data Providers
Plan vs. Actual Tracking of Funds & Volume
Apply Factual Learning to Future Plans
Provide Visibility to Current State of Affairs
Provide Each User With Unique and Relevant Fact-based Information

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 System Landscape for TPM

SEM-BPS PROMO Order MSA

CRM Server Item
Offer Offer
Item
Conditions
Products

BW Products
Conditions

SAP R/3
EBP/
SAP APO
PS CO-PA MM FI SD SRM

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TPM is a business process, not a product. In order to support the process, SAP has developed a solution
which spreads across a system landscape integrating CRM 4.0 with SEM/BW and R/3.
Here you can see the landscape, that is used for the process of trade promotion management. Of course,
the landscape will be determined by the individual customer, but there are components that are required.
SEM/BW is a requirement
CRM is a requirement
MSA is optional
EPB is optional
SAP R/3 is optional but is an important part. It is imagined that all customers will have an R/3 back end.
APO is optional

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 Trade Promotion Management

Headquarters:
PRE- Strategic sales and
promotion planning
Evaluation and
BW analysis

SEM
POST-

Portal Roles
• Brand Manager
• Trade Marketing Manager Field planning
Retail • Account Manager
execution and
validation
APO CRM

R/3 Customer sell-in

Mobile Mobile
and negotiation

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Comparison of the 5 step business process with the system landscape shows which components are required
for the different steps.
Pre- and Post-Analysis takes place in BW
Headquarter Planning is done by means of SEM (BW serves as data base)
For the field planning (Trade Promotion Planning) process, CRM and MSA (Mobile Sales Application)
are involved. Some data is also written to APO (optional).
Retail execution and validation takes place in R/3 and on MSA

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 Trade Promotion Planning – Integrated Approach

Mobile
CRM Server: Account and
Promotion
Marketing Planner Planning

SEM-
Planning data

BPS CRM Middleware

Query

Sales and
Historical
Trade
Sales and
Promotion
BW
Scan Data
Plan

SAP R/3: AC Nielsen

CO-PA USA

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Integration of SEM Planning with CRM for Trade Promotions

Integration of SEM-BPS through CRM Middleware
Integration of BW analysis with CRM for Trade Promotions („analysis-tab“)
BW serves as integrated platform for both actual and plan data
Actual data is loaded from R/3 (CO-PA) to BW
Plan data is written to the same BW Infocube
Transfer of Conditions from the promotion planning in CRM to R/3 to enable order entry and logistics
execution in the ERP backend system
Integration of the Mobile Sales Application (MSA) within TPM
The planning functionality of SEM-BPS is available offline
Account volume planning for planning customer
Detailed planning for trade promotions - Uplift and trade spends
The Layouts for the planning are defined as advanced layouts in SEM and can be downloaded to
Mobile Sales. The same layouts will be used within the promotional planning in CRM Online
Marketing Planner.

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 TPM Content in the business process

TPM Content Company/

Brand
Scan & Plan/Actual Comparison Planning
Causal Data Knowledge Generation e.g. SEM
e.g. ACNielsen BW
Historical Sales and
Shipment/
Analyze Cost Update
Trade Plan
Promotion
BW Planning
SEM/CRM
Sales and
Cost Tracking
R/3 CO-PA Sales Order
Processing
CRM – R/3

Execute
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Within the TPM scenario BW serves as an integrated platform for both plan and actual data.
The available business content covers both, planning and reporting functionality.
One InfoCube allows upload of actual data coming from R/3
Another InfoCube is designed to contain both plan and actual data thereby allowing plan/actual
comparisons. In the content, all queries are based on this cube.

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 Creating a Trade Promotion - Prerequisites

master data
CRM master data R/3
4.0
campaign determination,
Create and save pricing procedure
Trade Promotion SD
(Marketing Planner) CRM
Middleware

master data master data

SEM/BW
0BPARTNER 0CUSTOMER
0CRM_PROD identification via attributes
0MATERIAL

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As TPM is an integrated scenario, BW requires master data from both CRM and R/3
Identification of corresponding master data InfoObjects is achieved via attributes
Example:
0CUSTOMER (R/3) corresponds to 0BPARTNER (CRM)
0CUSTOMER has attribute 0BPARTNER (filled by DataSource 0CRM_CUST_ATTR)
When loading transaction data, field 0BPARTNER in the InfoCube is filled with this attribute
SalesOrg: no 1:1 relationship derivation via routine
Two different hierarchies for 0CRM_PROD: product hierarchy (R3PRODHIER) and brand hierarchy
(created in CRM)
Hierarchy for 0BPARTNER
Master data is required in BW before Trade Promotion planning can take place in CRM !

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 Master data

Master data is required in BW before planning can take place for

a Trade Promotion !

BW requires master data from both CRM and R/3

Identification of corresponding master data InfoObjects is

achieved via attributes

Master data for 0CRM_MKTELM (Marketing element = Trade

Promotion ID) is directly written to BW, extraction of additional
attributes is possible but not a prerequisite

Two different hierarchies for 0CRM_PROD: product hierarchy

(R3PRODHIER) and brand hierarchy (created in CRM)

Hierarchy for 0BPARTNER

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 Creating a Trade Promotion – Data Flow

WBS element
CRM PS R/3
4.0
campaign, pricing conditions,
rebate agreements, campaign
Create and save determination records
Trade Promotion SD
(Marketing Planner)
master data
CO-PA

plan data actual data

(volume, revenue, costs)

For InfoObject 0CRM_MKTELM

SEM/
BW copy actual data by SEM function
(including hierarchy derivation) Actual InfoCube
Plan/Actual InfoCube

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When a Trade Promotion is created and saved in CRM, data is written to different systems in the integrated
landscape:
Plan data is stored to a BW InfoCube directly from CRM
Master data for 0CRM_MKTELM (Marketing element = Trade Promotion ID) is directly written to BW.
This is a push process, not the usual BW extraction mechanism. Extraction of additional attributes is
possible but not a prerequisite
A WBS element is written to PS in R/3. This allows tracking of costs to the WBS element (and thus, to the
Trade Promotion).
Condition records and campaign determination records are written to SD in R/3
Subsequently, different processes take place:
When a sales order is entered in R/3 (e.g. via EDI), these conditions are automatically taken into account
Actual data is extracted from CO-PA in R/3 to the actual cube in BW
The actual data is then copied to the plan/actual cube in BW. During this process, a hierarchy derivation
takes place for all levels in the product and business partner hierarchies.
This procedure allows analysis of the actual data as well as plan/actual comparisons at all levels of the
product and BP hierarchy.

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 Mapping key figures – condition types – value fields

SD
rd R/3
CRM R eco
on
4.0 iti CO-PA:
Marketing Planner: nd
Co Condition Type
Key Figure

Condition Type Value Field

Transfer Structure:
Value Field BW InfoObject
SEM/
BW Planning: Actuals:
Key Figure is Key Figure is
BW InfoObject BW InfoObject

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When planning for a trade promotion in CRM, key figures are translated into condition types. These
conditions are then transferred to SD in R/3.
Condition types are mapped to value fields in CO-PA.
Value fields are mapped to key figures in the transfer rules in BW.
In this way, plan and actual data can be compared.

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 Analytics

Promotion
Pre-
Evaluation Promotion
Post-
Plan-Actual Evaluation
Plan/Budget
Comparison Check

SEM/ (Mapping according

BW to hierarchies

Sales & Marketing Sales & Marketing Sales & Marketing

Planning Actuals Knowledge

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Plan/actual comparisons can only be performed on the plan/actual cube after transfer of actual data from
the actual cube.
Analysis of actual data could also be done on the actual cube.
For matter of consistency, reporting on the plan/actual cube only appears more advantageous. This is also
the way the BW business content is set up.

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 Available content

Content is basis for both plan and actual data

master data: new InfoObjects

new characteristics
new key figures

transaction data
InfoSource: 0CO_PA_4 (standard CO-PA)
update rules: several routines
InfoCubes: 0CP_SLSC7 / 0CP_SLSC6
Queries

data mining model for determination of uplift factors (including

InfoCube and ODS)

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 Supply Chain Integration

CRM APO R/3

4.0 uplift
Total forecast
(incremental SD
Create and save sales
volume)
Demand Planning
Trade Promotion
(Marketing Planner) Baseline forecast CO-PA

baseline baseline
plan data actual data
(for display) (copy via SEM
function)

SEM/
BW copy actual data by SEM function
(including hierarchy derivation)
Plan/Actual InfoCube Actual InfoCube

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When planning for a trade promotion in CRM, two important key figures are the “baseline” and “uplift”
volume
Baseline Volume = expected sales volume without trade promotions

Uplift Volume = incremental sales volume caused by trade promotions in addition to the baseline
volume

Without supply chain integration it may happen that the planned sales volume (demand plan) exceeds
production capacities. Therefore, demand planning in APO can be integrated with TPM (optional).
Actual volumes are transferred to APO demand planning where a forecast for the baseline volume is
performed.
The baseline data is copied to BW and can be displayed during trade promotion planning.
The planned uplift volumes are transferred to APO and a total demand plan can be made (baseline + uplift)
in order to compare with available capacity

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 Data mining model for uplift prediction

Purpose of the data mining model:

generate an expected uplift volume to support the planning
process (uplift volume proposal, simulation)
based on baseline volume and data on historical promotions

Key Steps:
feed historical promotions into the prediction model
run the prediction process
provide the results as uplift factors (in a repository called
knowledge infocube)
run simulation process for a planned promotion
calculate a promotion uplift proposal

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Baseline Volume = expected sales volume without trade promotions

Uplift Volume = incremental sales volume caused by trade promotions in addition to the baseline volume
calculation of uplift factor: for amount of price reduction, promotion mechanics (tactic), product category
linear regression: identify a line of best fit through all data points, i.e. historical promotions
model to be calculated for each combination of discrete (limited number of values) promotion parameters
(e.g. for each tactic and product category)

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 Model details

calculation of uplift factor: for amount of price reduction,

promotion mechanics (tactic), product category

linear regression: identify a line of best fit through all data

points, i.e. historical promotions

model to be calculated for each combination of discrete (limited

number of values) promotion parameters (e.g. for each tactic and
product category)

Flexible Modification: different parameters for prediction and

simulation
add characteristics in infocubes if not yet included and ensure
correct sourcing
update training query and prediction query
modify data mining model fields
update planning level to include characteristics

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 Data Mining model: uplift prediction

Training
Query

Plan-Actual
InfoCube
Prediction
Query
Parameter
+ Result Prediction Prediction
Upload Result Model
Consolidation Identify and store
Knowledge ODS regression function
InfoCube
Parameter
Upload

Flat File

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 Data Mining model: uplift prediction

Simulation Process Overview

Show Traffic Lights
(Simulation Result)
Start Simulation Display Proposal
(Execute Function) (Simulation Result)

:
Execute Function

Read Uplift Factor Save Plan

(Planning Function) Data
Plan-Actual
Knowledge InfoCube
InfoCube Planning Layout
(Marketing Planner)

Fill a) Generate with analytical functions

InfoCube
(options) b) Upload of purchased flat files

c) Manual data entry into layout

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 Session Summary

Now you are able to:

explain the TPM business process

set up and use the TPM business content in BW

understand the identification of R/3 data with CRM data

explain the data flow

© SAP AG 2003

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