Could your trade funding be managed more efficiently?

Stephan Butscher and Javier Christie

Consumer goods companies use their customer trade funding to do too much. As a result these funds have ballooned, with little understanding of the details behind them. Once looked on as a tactical tool, they are increasingly expected to deliver the same profit effects as cost-cutting and efficiency drives. Software systems in isolation are not the answer. The solution is an integrated view of trade funding.

Many consumer goods manufacturers have in the past decade transformed themselves, successfully navigating their way through the various challenges that befell them. Cost-cutting, survival of 'the brand', logistics, manufacturing footprints and lately the increasing power of retailers have made such firms leaner and far more efficient. Now attention has turned to what many have traditionally seen as tactical: customer trade funding (CTF). Studies show that CTF has risen dramatically in recent years, comprising over half of the marketing budget and over 10% of total sales (1). Arguably the result of this has been an increase in sales volume and revenue. So why are manufacturers concerned?