Traditional promotion planning, often based on last year's plans, may not align with the need for substantially improving (financial) performance. Zero-Based Promotion Planning offers an alternative, compelling organisations to justify every promotion anew in each budgeting cycle.

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Strategic goal setting

Effective promotional planning begins with a comprehensive understanding of the role of promotions for brand, category, and customer development. This knowledge, coupled with the general category strategy, serves as the foundation for crafting a robust promotion strategy. While overarching objectives like market share, profitability, or sales growth are set at the strategic level, it is crucial to define granular objectives for individual promotion slots. These objectives extend beyond simply "increasing sales" and may include goals such as brand expansion, penetration growth, enhancing loyalty among existing customers, category expansion, driving retail switching to preferred, more profitable customers, and more.

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Source of Business® 

Integrating ZBP with the Accuris Source of Business methodology transforms the promotion planning process. Companies can now evaluate each promotional activity not just for the quality of its sales uplift but also for its strategic alignment with identified growth sources. This dual approach ensures that promotional budgets are not only spent efficiently but are also directed towards activities with the highest potential for sustainable growth.

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Overview of Zero-Based Budgeting

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Zero-Based Budgeting is a financial strategy that starts from the premise that no costs are pre-authorized. Instead, every expense in the upcoming period must be justified from scratch or from a "zero base." This approach contrasts sharply with traditional budgeting methods, which often extend past budgets into the future with incremental adjustments. ZBP's power lies in its relentless focus on cost justification and efficiency, making it an invaluable tool for companies looking to optimize their promotional spending in alignment with strategic growth opportunities.

 

Example: Consider a scenario where a FMCG company traditionally allocates £5,000,000 annually towards promotional activities based purely on historical spending patterns. Under ZBP, each proposed promotional activity for the new fiscal year must justify its existence and cost, leading to a more strategic allocation of the budget. This might result in identifying that only £4,000,000 of the traditional budget actively contributes to strategic growth targets, allowing for £1,000,000 to be reallocated towards more impactful initiatives.

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In-Depth Exploration of the Accuris Source of Business Methodology

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The Accuris Source of Business® methodology offers a comprehensive framework for analyzing and understanding the drivers behind sales growth. This analysis breaks down growth into five distinct sources: Cannibalisation, Competitive Brand Switching, Stock Piling, Retail-Level Switching, and Category Expansion. By applying mathematical modeling to each campaign and product, this methodology provides a nuanced understanding of how different factors contribute to sales growth, enabling targeted promotional strategies that leverage the most positive growth sources.

 

Example: A beverage company might use the Source of Business® methodology to analyze a recent promotional campaign. The analysis could reveal that a significant portion of the campaign's success was due to Competitive Brand Switching, with a smaller contribution from Retail Switching. This insight would suggest future promotions focus on strategies that encourage switching from competitors, rather than solely on swapping sales between retailers.