VectorVector
FUNDAMENTALS GUIDE

Trade Promotion 101
From Spend to Settlement

Master the fundamentals of Trade Promotion Management. This comprehensive guide covers the complete lifecycle, key roles, essential terminology, and common pitfalls to avoid in TPM.

All Guides

Table of Contents

1
Trade Promotion Lifecycle
2
Key Roles & Responsibilities
3
Essential Terminology
4
Common Pitfalls & Solutions
5
Best Practices Checklist
6
Next Steps & Resources

Trade Promotion Lifecycle

Understanding the complete journey from planning to settlement

1

Planning & Budgeting

Q4 (prior year)

Set trade budgets, allocate funds across channels, and establish guardrails

Budget allocationChannel planningGuardrail setup
2

Promotion Design

Q1-Q4

Create promotion mechanics, pricing, and terms with retailers

Mechanic designPricing strategyRetailer negotiation
3

Execution & Monitoring

Ongoing

Launch promotions and monitor performance in real-time

Promotion launchPerformance trackingDrift detection
4

Accrual Management

Monthly

Post accruals, reconcile estimates vs. actuals, and manage liabilities

Accrual postingReconciliationLiability management
5

Claims & Settlement

Ongoing

Process retailer claims, validate deductions, and settle accounts

Claim processingDeduction validationSettlement

Key Roles & Responsibilities

Understanding who does what in the TPM process

Trade Marketing Manager

Key Responsibilities:

  • Promotion design
  • Retailer relationships
  • Performance analysis

Key Metrics:

Promotion ROIRetailer satisfactionMarket share

Finance Manager

Key Responsibilities:

  • Budget management
  • Accrual oversight
  • Financial reporting

Key Metrics:

Budget varianceAccrual accuracyCash flow impact

Sales Manager

Key Responsibilities:

  • Retailer negotiations
  • Promotion execution
  • Relationship management

Key Metrics:

Sales volumeRetailer complianceRevenue growth

Data Analyst

Key Responsibilities:

  • Performance tracking
  • ROI analysis
  • Insight generation

Key Metrics:

Data accuracyReport timelinessInsight quality

Essential Terminology

Key terms every TPM professional should know

Accrual

Estimated liability recorded in the general ledger for trade promotions

Deduction

Amount claimed by retailer for trade promotion participation

Evidence Pack

Documentation bundle supporting a trade promotion claim

Promotion Drift

Deviation from planned promotion parameters during execution

Trade Spend

Total investment in trade promotions and retailer incentives

ROI

Return on investment - revenue generated per dollar of trade spend

Settlement

Final reconciliation and payment of trade promotion claims

Guardrails

Business rules and limits that prevent risky promotion decisions

Common Pitfalls & Solutions

Learn from common mistakes and how to avoid them

Poor Budget Allocation

Impact:

Overspend in some channels, underspend in others

Solution:

Use historical data and predictive modeling for allocation

Inaccurate Accruals

Impact:

Financial misstatements and cash flow issues

Solution:

Implement real-time tracking and automated reconciliation

Weak Evidence Collection

Impact:

High deduction rates and lost recoveries

Solution:

Automate evidence pack creation and validation

Lack of Real-time Visibility

Impact:

Late detection of promotion drift and poor performance

Solution:

Deploy real-time monitoring and alerting systems

Manual Processes

Impact:

Errors, delays, and high operational costs

Solution:

Automate routine tasks and implement AI-powered decision support

Best Practices Checklist

Essential practices for successful TPM

Planning Phase

  • Set clear budget allocation by channel
  • Establish guardrails and approval limits
  • Define success metrics upfront
  • Create promotion calendar
  • Align with sales and marketing teams

Execution Phase

  • Monitor performance in real-time
  • Track accruals accurately
  • Collect evidence systematically
  • Validate deductions promptly
  • Maintain audit trails

Ready to Take the Next Step?

Now that you understand the fundamentals, explore our advanced guides or see how Vector can automate your TPM processes.

Next: Scenario & ROI HandbookSee Vector in Action
Chat with Vector AI Assistant