SAN DIEGO -- The success of promotional planning under the auspices of Efficient Consumer Response depends upon forecasting models, according to an executive with Nestle Food Co.
Brand marketers should develop "enhanced forecasting models" by integrating sales, manufacturing, distribution and account-specific data into a single cooperative system, said Brad Anderson, national manager of sales technology for the company, based in Glendale, Calif. Anderson spoke at an ECR conference here sponsored by The Marketing Institute, a division of the Institute for International Research.
Marketing departments usually devise forecast models that do not reflect the expectations or performance of different departments such as sales, manufacturing and distribution, he said. To improve overall performance, marketers must participate in forecasting programs that account for each step of the distribution system, including retailers.
To embark upon cooperative forecasting, marketing and sales departments identify opportunities to be targeted in the upcoming year, he explained. These findings are then subject to an analysis based on previous promotions, sales trends and competitive responses.
"This step functions as a reality check for sales and for marketing," said Anderson.
After the articulation of intended targets, a marketing, production and distribution team formulates a manufacturing and distribution program to achieve the established sales goals, he explained. The targeting goals and information are also shared with individual accounts that are asked to commit to prescribed promotional programs and inventory levels. Account-level data is then fed back to allow manufacturers to adjust marketing and production programs accordingly.
Using elaborate mathematical models and complex computer simulations, this interdepartmental cooperation will allow brand marketers to develop highly accurate forecasts as well as a contingency plan for nearly any situation, said Anderson.
"This processing brain power can assimilate an amazing amount of data from sales, marketing, production and distribution," he said. "The only limit to inputs and alternative scenarios is your imagination."
The linkage of departments, suppliers and distributors fostered by these cooperative systems is necessary for the implementation of ECR, according to Anderson. "As we saw in the ultimate forecasting system," he said, "computers must be linked, integrated and in constant communication for ECR to work."