Merchants are the architects of promotion management and the driving force behind the scenes, orchestrating the entire lifecycle of their products and bringing promotions to life. However, this role is accompanied by a long list of challenges, from navigating dynamic and shifting market conditions to paving the way towards promotion execution blindly using insufficient data across multiple platforms.
It is a complex maze of challenges that impacts promotion effectiveness, but what if there was a method to turn these hurdles into opportunities and find a way out of fragmented data management and chaotic promotion planning?
In this blog, we will examine the tasks and missions associated with the merchant’s role, taking a look at the challenges they face when opting for a manual and outdated promotion management strategy, and the ultimate solution to all these challenges. In short, we will be answering these questions:
Merchants wear many hats, juggling a myriad of responsibilities across the entire lifecycle of their products. From sourcing and vendor negotiations to planogram design, promotion execution, pricing, and laying down a promotional plan. Promotion management is just one piece of this complex puzzle, but it’s the piece we’re examining today.
Merchants have many responsibilities day in and day out, when speaking promotions, they strategically organize and implement promotional activities to increase product visibility and drive sales. Their mission starts by selecting the right products and promotions based on the pre-defined goals and objectives and aligning with the preferences of their target audience.
Accordingly, a merchant’s mission involves negotiating with multiple vendors and suppliers to secure the best deals and optimize product offerings with more favorable delivery terms and competitive prices. Merchants play a massive role in promotion planning, identifying growth opportunities, and creating optimal strategies to develop and execute promotional campaigns. Such a feat might start by analyzing the retailer’s current situation and collaborating with various teams and departments to drive user acquisition, engagement, and ultimately, revenue growth.
Since their mission revolves around promotion management, they tend to control most aspects of the promotion planning process, track its performance, oversee its rollout, and ensure its seamless execution. Additionally, this role involves analyzing the promotion effectiveness, measuring its impact on sales and customer behavior, and leveraging available insights to take the needed measures to optimize it for better results.
In short, such a role requires a comprehensive understanding of market trends, customer motives, and product positioning. It is a major requirement for merchants to have strong analytical skills and a leadership mindset to adapt to the ever-changing market dynamics and consumer preferences, and then adjust their promotional strategies accordingly. This role requires cross-departmental collaboration to ensure that the promotions are executed according to the plan, but it isn’t for the faint of heart, as it comes with a long list of challenges:
Since retail markets are in constant competition, they are prone to rapid changes in consumer preferences, trends, and competitive landscape. Without a data-driven and automated approach to monitor and follow up on these changes, merchants struggle to adapt their pricing and promotions quickly enough to stay ahead of market dynamics.
Out of the aforementioned challenges, inflation is the most critical one for merchants, as it distorts the economic landscape, impacts business operations, and drives the consumer towards cautious spending and making delayed purchases more often. In inflammatory environments, the rising cost of raw materials, labor, and transportation squeezes profit margins and makes it difficult for merchants to operate and maintain an efficient promotion management approach.
In promotion planning, data-backed decision-making became a must, ensuring accuracy and making adjustments based on predictive insights and information, and not just based on gut feeling. Flying blind with promotions and being unable to get a proper and holistic view of anticipated performance or even track current ones brings chaotic decision-making, wasted resources, and ineffective adjustments that do nothing to an underperforming promotional campaign.
In the absence of data-driven tools, traditional promotion management today relies heavily on processing historical data to generate forecasts, disregarding the potential of AI-powered predictive forecasting. Inaccurate forecasts often result in inventory mismanagement and might end up damaging the retailer’s reputation due to understocking and customer dissatisfaction. In most cases, merchants relying on outdated forecasting engines end up misjudging demand and distorting pricing decisions, creating ineffective promotions and failing to unlock their full potential.
Running an effective promotion and implementing an efficient pricing strategy requires seamless collaboration between different departments (marketing, vendors, sales, and supply chain). Miscommunication and lack of alignment can hinder the promotion’s success and affect its overall performance, derailing it away from consumers’ specific needs and purchasing intent, and creating misaligned promotions that don’t convert. Collaboration with vendors is even more challenging as it’s an external party, which poses the need for a single platform to streamline operations and simplify communication and collaboration on various tasks and missions.
What else hinders efficient collaboration during the promotion management process? The lack of robust tools to support vendor negotiations. Today’s Vendor deals involve intricate terms and conditions that require countless calculations and an AI-powered tool to digest the complex structures and calculations accompanying it, especially since manual processes are error-prone and time-consuming. The lack of such analytical capabilities and the absence of a data-driven platform to host complex negotiations and standardize the changes made by multiple contributors limits the negotiation leverage and puts the entire promotion at risk.
Without standardized data collection and analysis, information gets siloed and becomes difficult to utilize to make comparisons. During promotion planning, if one team is looking at retention rates, another one is tracking sales lift, and the other one is focusing on customer acquisition, there will be a big issue assembling all data from different platforms for a clearer view of the promotion effectiveness. Another example is when every merchant plans promotions differently, creating a lot of blind spots and making performance tracking a nearly impossible task.
Merchants can navigate and make sense of dynamic market conditions by harnessing the power of predictive analytics. This involves utilizing advanced statistical techniques and models to analyze historical data to forecast future trends, sales patterns, market movement, and even consumer behavior. These features help merchants proactively adjust their promotions and pricing strategies in real-time for optimized promotions and overall results. AI algorithms learn from real-time data to adapt to the rapid changes in consumer preferences and trends to stay ahead of market dynamics.
In today’s retail environment, most merchants struggle with fragmented data, leading to a narrow field of view of current and anticipated outcomes of promotions. An AI-powered promotion management solution like PromoAI serves as a centralized hub and a single platform to showcase past promotional performance and ROI metrics at all levels of the business. The centralization not only simplifies data management and enhances a merchant’s ability to plan and execute effective promotions, but also empowers them with actionable insights that lead to informed decision-making and better overall performance.
A data-driven promotion management solution with a dedicated deal management feature like Promo Funder is a great addition to a merchant’s arsenal. In terms of performance tracking, it leverages trade funds/vendor performance data on vendor funding, providing the needed data to support negotiations with suppliers and help drive an increase in vendor funding, simplifying collaboration between merchants and vendors, while saving up on labor cost and time needed to close a deal.
For increased accuracy and better contribution to evaluating the merchant team’s promotion performance, a single and standardized platform improves collaboration between different parties involved in promotion management, and even with external parties. Any edit or update announced by a merchant gets standardized across that single platform, guaranteeing that all stakeholders have access to the same and most up-to-date information, ensuring consistency in communication, and eliminating potential discrepancies.
Often challenged by the absence of promotion effectiveness metrics, merchants find it difficult to understand the impact of the promotions they are executing. Cognira’s Promo Analyzer provides a way out of this problem by leveraging promotional performance data to support decision-making. For example, a merchant manager can refine their promotion planning strategy by gaining a holistic view of how their promotion will perform, helping them to pick the best promotional candidates from their team, and better leverage events to drive business goals.
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