Effective trade promotion scenario planning for CPGs

Key takeaways

• Scenario planning is essential for navigating market uncertainty, allowing CPG companies to model "what-if" situations and predict promotional outcomes before investing capital.

• Integrated data harmonization is the foundation of effective planning, combining POS, syndicated, and internal data into a single source of truth.

• Predictive analytics and AI can increase promotional efficiency by 15-20% and reduce excess inventory by 25-30% according to McKinsey.

• TELUS Trade Promotion Management streamlines the process by automating complex calculations, offering real-time visibility, and supporting collaborative joint business planning.

Executive summary

In today’s volatile market, instinct-driven decisions are no longer sufficient for managing the significant investments required for trade promotions. For many consumer goods manufacturers, trade spend is the second largest item on the P&L after cost of goods sold. Despite this, many organizations struggle with execution; according to the Promotion Optimization Institute (POI), 61% of companies face difficulties executing promotions as planned.

TELUS Agriculture & Consumer Goods empowers businesses to bridge this gap through sophisticated Trade Promotion Management and optimization solutions. By utilizing scenario planning, CPG leaders can move away from reactive "last year plus" strategies and toward proactive, data-driven excellence. This blog explores how integrating scenario planning into your trade promotion process helps maximize ROI, adapt to rapid market changes, and drive smarter commercial decisions.

Understanding scenario planning for CPGs

Scenario planning is a strategic methodology that involves creating multiple potential future models to better prepare for market uncertainties. In the context of consumer packaged goods (CPG), it allows teams to simulate different promotional tactics, pricing changes, and competitor reactions to see how they impact key metrics like volume, revenue, and profit.

Unlike static annual playbooks, scenario planning is dynamic. It uses predictive analytics and historical data to generate side-by-side quantifications of potential plans. This approach moves the planning process beyond simple forecasting into a prescriptive realm where AI-enabled tools recommend the optimal course of action based on specific business goals.

Why is scenario planning important?

The importance of this practice cannot be overstated. According to Infosys, up to 70% of trade promotion is ineffective because of badly planned promotions. Canadian organizations that fail to model outcomes before execution are essentially gambling with the majority of their gross sales.

Effective scenario planning provides:

• Risk mitigation: By identifying potential fail points in a promotion before it goes live.

• Strategic agility: The ability to rapidly pivot when market conditions—such as supply chain disruptions or inflationary shifts—occur.

• Retailer alignment: Providing fact-based data during joint business planning (JBP) sessions, which makes you a more credible partner.

Role of scenario planning for trade promotions

Scenario planning addresses the common hurdles of fragmented tools and manual processes by providing a structured environment for testing.

Enhancing trade promotion effectiveness

With advanced scenario tools, managers can model what-if situations like, "What happens if I increase my discount by 5% but move the display to a secondary location?" or "How will a competitor's likely price drop affect my volume?". These simulations help find the most profitable strategy without risking capital in the real world. Not all promotions are created equal; scenario planning allows you to evaluate the incremental lift—the sales that occurred specifically because of the promotion—versus the base sales.

Adapting to market change

Consumer behavior is shifting rapidly. In 2026, many shoppers are classified as value seekers who make cost-conscious choices. Scenario planning helps brands adapt to these trends by testing price-pack architecture and right-sized pack strategies to defend volume and market share.

Trade promotion scenario planning process

Implementing an effective scenario planning process requires a shift from manual spreadsheets to integrated digital ecosystems.

Integrating forecasting models with scenario planning

Effective planning starts with accurate baseline management. You must understand what your sales would look like in the absence of a promotion. By integrating forecasting models with your scenario tools, you can smooth out seasonal variations and account for external market shocks. This integration ensures that your what-if scenarios are built on a realistic foundation of consumer demand.

How to use effectiveness metrics in scenario planning

To gain the most from your simulations, you must track the metrics that truly drive growth. Key metrics to include in your scenario modeling include:

• Promotional lift: The percentage increase in sales volume over the baseline.

• Trade efficiency: A value above $1 means your promotion is bringing in more than it costs.

• Incremental dollars: The actual revenue generated specifically by the promotional activity.

• Cannibalization and halo effects: Understanding if a promotion on one product is stealing sales from another of your brands (cannibalization), or encouraging consumers to buy more products in your catalogue (halo effect).

Case study: Strengthening trade programs through scenario planning

Consider the success of 1440 Foods, a leading North American sports nutrition manufacturer. They struggled with manual, spreadsheet-based planning that lacked real-time visibility. By implementing TELUS Trade Promotion Management software, they replaced outdated Excel processes with an integrated system.

The result was a transformation in their ability to plan and analyze. They achieved streamlined settlements, a significant decrease in outstanding deductions, and improved budget awareness. This data-driven approach allowed their team to access reports easily and update spend events multiple times a day, providing the confidence needed to win in a competitive retail landscape.

Future of scenario planning in TPM

The future of TPM lies in autonomous decision-making and prescriptive analytics. AI and machine learning are taking tools beyond simple data visualization. We are entering an era of agentic AI, where digital assistants can answer complex queries like "Which promotions were least effective last quarter?" and provide immediate suggestions for improvement.

As reported by 360 Research reports, Cloud-based platforms are now the standard, representing 71% of new deployments. These platforms enable real-time tracking and the ability to handle massive datasets from diverse sources including POS, survey data, and digital household panels.

How TELUS Trade Promotion Management software can help

TELUS Trade Promotion Management is purpose-built to help CPG organizations navigate these complexities. Our solution streamlines the entire promotional lifecycle—from planning and approval to execution and financial settlement.

By choosing TELUS, you gain access to:

• Real-time visibility into accruals, deductions, and fund utilization.

• Data-driven forecasting that uses AI to enhance precision and align with market conditions.

• Scenario mining functionality that lets you build What-If scenarios from scratch or leverage a library of past successes to speed up planning.

• A unified foundation that harmonizes disparate data sources into a single source of truth.

Ready to stop guessing and start growing? Request a demo to see how our trade solutions can drive sales and maximize your promotional ROI.

FAQs

What data is used in trade promotion scenario planning?

Trade promotion scenario planning uses a combination of internal and external data, including point-of-sale (POS) data, shipment data, syndicated market data, and historical promotional performance. It also incorporates competitive pricing and market intelligence to ensure simulations reflect real-world dynamics.

How does scenario planning support better forecasting?

Scenario planning supports better forecasting by allowing teams to model the impact of different variables—like price points or display tactics—before they happen. This moves forecasting from a reactive last year approach to a proactive model that accounts for current market shifts and seasonality.

What metrics matter most in scenario planning?

The metrics that matter most in scenario planning are those that define true incremental growth, such as promotional lift, trade efficiency, customer margin, and incremental revenue. Additionally, modeling for cannibalization and price elasticity is critical to ensure that gains in one area don't cause losses elsewhere.

How is scenario planning different from standard trade promotion planning?

Scenario planning is different from standard trade promotion planning because it is forward-looking and dynamic rather than static. While standard planning often relies on replicating previous years' calendars, scenario planning uses what-if analysis to test multiple potential outcomes and optimize strategies based on predictive analytics.

Who should use trade promotion scenario planning in CPG organizations?

Trade promotion scenario planning should be used by sales directors, revenue growth managers, and trade marketing leads within CPG organizations. These roles are responsible for optimizing trade spend and ensuring that promotional investments align with both retailer goals and internal financial objectives.