tpm - ensure a promotion uses the right buying pattern

7/24/2019 TPM - Ensure a Promotion Uses the Right Buying Pattern

http://slidepdf.com/reader/full/tpm-ensure-a-promotion-uses-the-right-buying-pattern 1/7

1 de 7

SAP CRM conceptstechnology, and bestpractices

Part of the

knowledgebase

This article was printed from the CRM Expert knowledgebase. You can find the original version here:http://www.crmexpertonline.com/article.cfm?id=1475

Reproduction of this article is strictly prohibited.

Trade Promotion Management

Ensure a Promotion Uses the Right Buying Pattern

by Michael Debevec, President, Debevec Consulting, Inc.

Learn how mySAP CRM Trade Promotion Management uses the data within buying patterns to distribute the predicted promotional volume.Then find out why the system might override a default buying pattern and what you can do to avoid this.

Key Concept

Trade Promotion Management (TPM) helps you plan and execute trade promotions. A part of Marketing Planning and CampaignManagement within mySAP CRM, it works with Business Information Warehouse’s Business Planning and Simulation (BW-BPS), mySAPERP Central Component (ECC) or R/3, and Advanced Planning and Optimization. With TPM, the key account manager (KAM) plans the tradespends offered to the customer for promoting the product. This translates into condition records and rebate agreements in R/3 or ECC. TheKAM also plans the promotional volume expected as a result of these trade spends.

Imagine that you are a key account manager (KAM) planning promotional events with your customer. All of the customer’s promotional eventsstart on a Sunday and run for three weeks. Depending on the reason for the promotional event, your customer may order most of thepromotional product early and reserve the rest to cover potential stock-outs.

In other cases, your customer may elect to use its safety stock and then order the bulk of the product toward the end of the buying period torestock its warehouse. When you enter the promotional event in the system, you select the expected buying pattern, which adjusts theforecasted sales volume to reflect the expected customer behavior. Sometimes the system appears to ignore your selected buying pattern,leaving you to wonder, “Why was my buying pattern not used in this trade promotion?”

Here’s what you need to know about buying patterns in Trade Promotion Management (TPM), including how they work and how to calculate the

buying pattern distribution to ensure that the system uses the appropriate one. This information is not found in either online help or in the IMGdocumentation.

Customer Default Dates and Buying Patterns

SAP developed buying patterns to facilitate the planning process and to improve the accuracy of the data shared with Advanced Planning andOptimization (APO). They allow the system to spread the promotional volume more realistically than with a straight weekly proration. Thisaltered distribution provides a more accurate demand signal to APO and reduces the chance of stock-outs during promotional events.

Customer defaults allow a KAM to create customer-specific templates to simplify trade promotion creation. Buying patterns allow the KAM tostore standard ordering distribution patterns that improve the demand signal sent to APO. Buying pattern distributions depend on the customerdefaults created by the KAM, the calendar assigned to the trade promotion, and the starting day of the promotion. When the trade promotiondoes not meet the prerequisites of the customer defaults, the system ignores the entered buying pattern.

The system links both customer default dates and buying patterns to specific campaign types. If you’re implementing TPM, consider creatingdifferent campaign types to represent different promotional durations (e.g., one week, two weeks). KAMs can use customer defaults and buying

patterns in the different campaign types to reduce data entry and improve demand signals sent to APO.

Maintain customer default dates and buying patterns in the Maintain Customer Defaults screen by following menu path SAPmenu>Marketing>Marketing Planning and Campaign Management>Administration (transaction CRM_ MKTPL_DEFAULTS). In thisscreen the KAM sets up default time dimensions and volume spreads for specific accounts. The Campaign Type column stores the customerdefault values (Figure 1). For each campaign type, identify a calendar (called a factory calendar), the starting day of the promotion, the length ofthe promotion, and then the appropriate offsets from the planning dates, such as the buying period. For example, the buying period could starttwo weeks prior to the beginning of the planning period.



2 de 7

Figure 1 Maintain Customer Defaults initial screen

In addition to the planning (in-store) period, a typical trade promotion includes buying, pre-dip, and post- dip periods. The planning (in-store)

period is the actual time the promotion is in effect in the store, with products displayed. The buying period either can be the same as theplanning (in-store) period, or can include the post-dip and pre- dip periods. Refer to Table 1 for more information about the buying, pre-dip, andpost-dip periods.

Period Description

Buying period The interval for which the pricing conditions are valid. This can becongruent with the planning period, but often starts earlier than theplanning period and may end prior to the end of the planning period.The time difference allows for the time needed to move product fromthe customer’s warehouse to the retail shelves.

Pre-dip period The time period during which the baseline order volume dropsbecause customers often delay normal orders until the beginning ofthe buying period.

Post-dip period The time period just after the promotion during which order volumedrops because customers often order additional product (forward-buy) just prior to the end of the buying period to stock their warehouseswith less- expensive product.

Table 1 Trade promotion periods

Note

You can assign up to two additional date periods in a trade promotion, but currently no special processing exists for these date periods. Touse these periods in a meaningful way (for example, to default the validity period of a condition record) requires programming BusinessAdd-Ins (BAdIs) to change standard system behavior.

You can enter pre-dip and post-dip period values in the trade promotion and associated forecasted volumes to reflect customer purchasing

behavior. The customer default record assumes a standard ordering pattern for a given customer. For example, a standard pattern could be thatthe customer always starts its promotions on a Friday and reduces its safety stock one week prior to a promotion. If you maintain the customerdefault record when you create a trade promotion, the KAM enters the customer name and the beginning date of the planning period andpresses Enter. The system then completes the rest of the date ranges for the customer’s promotion.

The Buying Pattern tab in Figure 2 allows you to create buying patterns to influence the distribution of expected promotional volume. When theKAM selects the appropriate buying pattern in the basic data screen of the trade promotion, the system distributes the total promotional volumeacross the promotion period.



3 de 7

Figure 2 Define buying patterns

As with customer default dates, you link buying patterns to a specific campaign type. However, unlike customer default dates, the BuyingPattern Type column allows you to assign multiple buying patterns to the same campaign type. You maintain buying patterns on the MaintainCustomer Defaults screen, but the system does not default to them in the trade promotion.

Note

The Buying Pattern Type is simply a label created in configuration — it has no specific meaning nor is there any validation behind the label.For example, in Figure 2, the labels include 3 week pattern and 4 week pattern. You could assign a duration of two weeks to either of theselabels without raising an error.

A KAM must enter a buying pattern into the trade promotion manually. The rule is one set of default date assignments per customer andcampaign type combination, although you can have many possible buying pattern schemes. After you select the buying pattern type, the KAMenters a duration and then a set of percentages based on the duration. You must remember three things when establishing default buyingpatterns:

1. If your planning layout is in calendar weeks, then your buying pattern must be in weeks, too.

2. The duration of the buying pattern in the trade promotion is based on the additional date configuration settings. These determine whether thesystem should consider a particular date in the buying pattern period determination (Figure 3). If the pre-dip and post-dip dates are not part ofthe buying pattern determination, then the system does not use them to determine the length of the buying period.

3. The sum of the percentages of the buying period must equal 100%. Although initially you could not begin or end a buying pattern with 0% inmySAP CRM 2005, SAP has lifted this restriction with Support Package (SP) 4. The need for 0% depends, in part, on how you configure thepre-dip and post-dip period date ranges. When you include these date ranges as part of the buying pattern, the system spreads the promotionalvolume to include those weeks. To prevent placing demand in the pre-dip period, for instance, you must enter 0% for this period.

Figure 3Additional date assignments configuration — the system does not consider pre-dip and post-dip periods inbuying pattern period determination

Tip!



4 de 7

In the Promotion Calendar tab, you enter known customer-initiated events. While they do not show up in individual trade promotions, youcan view them from within the marketing calendar by using the customer view. This enables the KAM to coordinate the manufacturer’s tradespending and enhance the impact of a customer’s event.

In my example in Figure 4, I defined a three-week buying pattern with significant back- loading of the promotion. This means that the customerreceives 70% of the volume in the last week of the promotion.

Figure 4 The defined buying pattern

This pattern makes the calculation process more obvious, although from a business perspective this type of buying behavior is not desirable fordistributors. In this case, customers use the large shipments at the end of the promotional period to refill and overstock the warehouse withcheaper product bought at the promotion rate. The customer in turn sells the product for full price after the promotion ends and keeps theprofits.

Buying Pattern in a Promotion

Figure 4 shows the basic data screen for a three-week consumer packaged goods (CPG) promotion. I’ll use this example to discuss how thesystem uses a buying pattern to distribute sales volume during the promotion period. To do this, a buying pattern must meet the followingprerequisites:

A buying pattern record exists for the combination of business partner, sales area, and campaign type. (The F4 help for this fielddisplays all of the configured pattern labels; it is not restricted to the labels that the KAM maintained for that customer.)

The duration of the buying pattern entered in the promotion basic data screen must be the same as the duration of the promotion. InFigure 5, assume that the buying period has the same duration as the planning period displayed. For my example, the buying patternduration I entered in the master data must be three weeks because the promotional period is three weeks.

You must enter a Workday Calendar into the basic data screen of the trade promotion. Without this calendar, the system ignores thebuying pattern.



5 de 7

Figure 5 A three-week promotion. Click here to view a larger version of this image.

Note

When calculating the duration of the promotion, the system rounds to the nearest period of the buying pattern. If the buying pattern is inweeks, then any promotion that is at least 11 days long and no more than 17 days long is considered a two-week promotion.

The buying pattern in Figure 4 meets the prerequisites, so I can use it in the Volumes/Trade Spends tab in Figure 5. After entering theproducts involved in the promotion in the Products tab, I switch to the Volumes/Trade Spends tab and enter the expected total volume for thepromotion (Figure 6). In this example, I spread the volume across the Shipping date range. Two things about the volume distribution may strikeyou as odd. First, Figure 6 shows four weeks (periods) in the Shipping area, not three. Second, the spread does not match the 10% – 20% – 70% entered in the default record in Figure 4. What is happening?

Figure 6 Volumes/Trade Spends distribution

Calculate the Buying Pattern Distribution

Four periods are visible because each period within BW-BPS begins on a Monday. Since my example promotion began on a Sunday, the



6 de 7

system needs four weekly periods to store the data in BW-BPS. The first period of the promotion consists of a single day and the last perioddisplayed represents six days. To understand how the system arrived at a distribution of 1% – 11% – 27% – 60% instead of the 10% – 20% – 70% maintained in the customer defaults in Figure 4, let’s look at the detailed steps in the calculation process. The variance from 100% is dueto rounding.

Step 1. Determine the distribution factor by reading from the master data record of the buying pattern. Find the buying pattern record byusing the business partner, campaign type, and duration of the promotion. This returns the three-week pattern of 10% – 20% – 70%. If thepromotion had started on a Monday rather than a Sunday, then you would see three periods displayed, not four. Also, the volume distribution forthe 1,000 units would have been 100, 200, and 700 instead of 14, 114, 272, and 600.

Step 2. Determine the calendar factor for the first period. Calculate the number of working days in the first promotion period and divide thatby the total number of working days in the week. In this case, the number of promotion days in the first period (the period starting 10/04/2010) isone and the number of working days in the first period is seven.

Note that the factory calendar used in the trade promotion affects both of these determinations. Normally the factory calendar has sevenworking days each week (barring holidays). The calendar factor equals the number of days within the promotion period for the week divided bythe number of days in the week. In this case, the factor would be one day divided by seven days (approximately 14%). Because the total for thefirst week of the promotion is 100 cases, the number of cases in the period beginning 10/04/2010 is 14.

Step 3. Prorate the promotional volumes based on the calendar factors. Whenever a promotion starts mid-week, the system splits eachbuying pattern factor between two calendar weeks. In my example, the 100 cases from the first buying period are split into 14 and 86 (100 - 14).The system stores this until you calculate the next period splits.

Each period is split into 1/7 of the amount to be placed in the current period and 6/7 of the amount to be rolled over into the next period. For myexample, you calculate the second period number by determining the second period split (1/7 x 200 = 28 cases). Then add the 28 cases fromthe first buying period rollover (86) to get 114 cases. Repeat the same process for the last two periods.

Factors That Influence the Calculations

Factory calendar. Recall that the calendar factor equals the number of days within the promotion period for the week divided by the number ofdays in the week. The calendar factor’s numerator (number of days on promotion for the week) and the denominator (number of working daysthis week) are based on working days. If a holiday falls during the promotional period, it changes the ratios for the week that includes theholiday.

For example, suppose Columbus Day (October 12th) is marked as a holiday during the first week in the factory calendar assigned to the tradepromotion. The ratios would be 1/6 and 5/6 for the first period, instead of 1/7 and 6/7. With the holiday, the system would report 17 cases (17%of 100) in the first week. The first buying period rollover in this case would be 83 cases instead of 86 cases (100 - 17). The 28 cases in thesecond period split would remain the same because the second week reverts to the standard 1/7 and 6/7 ratios, so the second week total wouldbe 111 cases (83 + 28). The actual algorithm is a bit more complicated that this, but conceptually this is the impact on the distribution.

Volume entry column. The Volumes/Trade Spends tab enables you to enter either total volume, which then calculates uplift (total volume -baseline volume) or uplift volume, which then calculates total volume (uplift + baseline). Although it is possible to maintain negative percentagesin the buying pattern default, if you enter total volume in your trade promotions, then you should not use negative percentages in your buyingpattern. A negative promotion results in a negative uplift greater than your baseline shipments. In other words, you forecast returned stock inthat period.

Pre-dip and post-dip volumes in buying pattern. If you include pre-dip and post-dip volumes in the buying pattern, then the total volumeperiod is the sum of the pre-dip, buying, and post-dip periods. The total volume entered is distributed to include the pre-dip and post-dip periods.You must include percentages for those periods in your pattern. (If you do not maintain pre-dip and post-dip dates in the trade promotion, theyare not included in the length of the buying pattern period.)

For example, if you assume a one-week pre-dip period, a three-week buying period, and a one-week post-dip period, then the total buyingperiod is five weeks. You must select a buying pattern that is maintained for the five weeks.

Alternatively, if the pre-dip and post-dip periods are not part of the buying pattern (as in Figure 3), but you enter dates for those periods into thesystem, then (assuming you enter total volume) the system records the total volume in the pre-dip and post-dip periods as zero. It thendistributes the total volume entered among the three weeks of the buying pattern. In effect, with this setting, the system assumes a negativeuplift equal to the baseline forecast for those two periods. You can manually override this default if necessary.

Promotions Not Equal to the Calculated Duration

An 11-day promotion is considered to be a two-week promotion for buying pattern purposes. The proration calculation process results in buyingpattern factors that total less than 100% because the second week is an incomplete week. If you multiplied the total volume by the sum of thecalculated percentages, some of the volume would be unaccounted for. This “missing” volume is spread across the periods based on the ratioof the calculated percentages.

When you round down the promotion duration (e.g., a 16-day promotion is considered a two-week promotion), the leftover period (the time inexcess of the two weeks, in this case two days) receives the remainder of the product volume. When a promotion starts on a Monday, thesystem spreads the volume between the first two full periods. The remainder period contains zero volume. Conversely, when a promotion startsmid-week, then the last period contains the remainder volume from the first two weeks of distribution. In other words, adding extra days at theend of a promotion does not increase the volume distributed to the last period.

Michael Debevec is a senior consultant with nearly 12 years of experience with SAP. He has worked with mySAP CRM for the past six years



and assisted in implementations in high tech, consumer products, and pharmaceuticals industries. Prior to working in SAP, Michael was an ISmanager in charge of logistics systems. You may contact Michael via email at [email protected].

Copyright © 2008 Wellesley Information Services. All rights reserved. Email: [email protected] Expert, 20 Carematrix Drive, Dedham, MA 02026, USA.

Sales and Customer Service: 1-781-751-8799SAP and the SAP logo are trademarks or registered trademarks of SAP AG in Germany and several other countries.

tpm - ensure a promotion uses the right buying pattern

Documents