Customer
Story:
Barilla Group
TRADE PROMOTION
OPTIMIZATION
Barilla Group was established in 1877 as a family-owned, Italy-based food
manufacturer. The company cemented itself as an expert in pasta and ready-to-
use sauces around the world over the course of a century and has since
expanded its business to restaurants and other goods. It is now an international
group present in more than 100 countries.
Like most markets in the consumer goods industry, the competition Barilla
Group faces is increasingly fierce and forces companies to offer discounts in the
pricing battle.
In fact, businesses across the globe spend over $1 trillion annually on trade
promotions to stay ahead of competition (Nielsen). This spend is the second
highest expenditure after Cost of Goods Sold (COGS).
Yet, as the Promotion Optimization Institute's market research has shown,
managing trade promotion is a typical pain point for Consumer Packaged
Goods (CPG) companies and continues to be one of the greatest challenges in
the industry.
www.nealanalytics.com
Optimizing Trade Promotion with Machine Learning
CONTINUOUS IMPROVEMENT
When asked whether managers are satisfied with their ability to manage trade promotions in
the same survey, the general response could be qualified as lukewarm at best.
Mediocrity wasn’t good enough for Barilla Group Barilla Group’s core value to drive continuous
improvement led it to seek new avenues for change within trade promotion management and,
ultimately, to the doorsteps of digital transformation. Through its desire to operate with
transparency and greater intelligence, Barilla Group found it could leverage AI and machine
learning to more effectively plan trade promotions by working with Neal Analytics.
Barilla Group worked with Neal Analytics, Ernst Young, and Microsoft to create a solution to
enable key account managers to create trade promotion plans with optimized ROI and guide
trade marketing strategies that will propel them in the fast changing and competitive market.
The collaboration drove the development of a cloud-based analytics solution that could
evaluate the cost and benefit of past promotional campaigns and predict future campaigns’ ROI
on-the-go.
Source: 2017 POI TPx Retail and Executive Survey
www.nealanalytics.com
LEVERAGING HISTORICAL DATA
The first component of the promotion optimization solution was to leverage historical sell-in
and sell-out data and provide a 360-view of past promotion outcomes. By leveraging machine
learning techniques, Neal Analytics was able to estimate baseline sales and calculate
incremental sales driven by each individual promotion event during its run. This enabled further
calculation of promotion profitability and ROI which were key success metrics in evaluating
Barilla Group’s trade promotion performance.
Neal Analytics created an interactive report to model the incremental impact on sales resulting
from past promotion campaigns. The uncovering of historical data patterns has provided Barilla
Group key account managers with a better understanding of and deeper insights into what
drives the success of a promotion campaign, which promotion tactics works best, which region
witnesses higher promotion uplift, and in which situation consumers are more likely to buy
promoted products.
OPTIMIZING PROMOTION
“86% of consumer goods PLANNING
companies tell us at the
Promotion Optimization The second component of the solution was to
Institute (POI), via the POI optimize promotion planning and predict their future
TPx and Retail Execution outcomes. To facilitate their future decision-making, a
Survey, that they are not set of machine learning models were additionally
satisfied with their ability developed to predict how would be. Historical sales
to manage trade patterns were analyzed to uncover key factors
promotions. And, impacting promotion performance. Using machine
unfortunately, this level of learning, the models predicted various promotion
satisfaction has declined 5
percentage points from the KPIs, such as baseline and incremental sales, for
prior year’s survey.” multiple products based on dozens of segments such
as specific stores and time of year.
Neal Analytics’ Trade Promotion Optimization
2017 POI TPx and Retail
Execution Survey predictions and simulations identifies the best time
and the tactics for maximum profitability and
effectiveness in future campaigns. These insights
enable Barilla Group’s key account and trade
marketing managers to quantify promotional impact
on sales.
www.nealanalytics.com
OPERATING WITH
INTELLIGENCE
By creating a machine learning-driven solution
for promotion optimization, Neal Analytics has
equipped Barilla Group with an engine can
forecast promotion profitability and ROI based
on innumerous variables.
Now that Barilla Group can optimize
promotion planning by predicting investment
outcomes, the business can truly operate
strategically and with intelligence.
Thanks to its continuous search for
improvement, Barilla Group has begun their
digital transformation journey and now looks
forward to turning trade promotion from a
business challenge to a business asset.
“This solution fills a critical need for our key account managers and revenue growth
management team to evaluate historical promotion performance and enable better
promotion planning where both Barilla Group and our customers benefit in the
future.”
Emilie Bianchi Revenue Growth Manager
Western Europe,
Barilla Group
11911 NE 1st Street, Suite 206, Bellevue, WA 98005 | 425.822.2332 | [email protected]
www.nealanalytics.com
@NealAnalytics LinkedIn.com/company/NealAnalytics
www.nealanalytics.com
