What is incremental trade spend ratio in SAP CRM-MKT-MPL-TPO - SAP Trade Promotion Optimization?

SAP Term: incremental trade spend ratio

• Component: CRM-MKT-MPL-TPO

• Component Name: SAP Trade Promotion Optimization

• Description: Key performance indicator that measures whether the promotion contributes to the manufacturer's profit or not. It determines the effectiveness of a promotion based on the ratio of incremental volume generated and promotion budget spent.

Smart SAP Assistant

• Key Concepts: 
  Incremental trade spend ratio is a metric used in SAP Trade Promotion Optimization (CRM-MKT-MPL-TPO) to measure the return on investment (ROI) of a trade promotion. It is calculated by dividing the incremental sales generated by a trade promotion by the total cost of the promotion. This metric helps to determine whether a trade promotion was successful or not. 
  
  How to use it: 
  To calculate the incremental trade spend ratio, first determine the total cost of the promotion, including any discounts, rebates, or other incentives offered. Then, calculate the incremental sales generated by the promotion. Finally, divide the incremental sales by the total cost of the promotion to get the incremental trade spend ratio. 
  
  Tips & Tricks: 
  When calculating the incremental trade spend ratio, it is important to consider all costs associated with the promotion, including any discounts, rebates, or other incentives offered. Additionally, it is important to consider any additional costs associated with running the promotion, such as advertising or marketing costs. 
  
  Related Information: 
  The incremental trade spend ratio is closely related to other metrics used to measure ROI of a trade promotion, such as return on marketing investment (ROMI) and return on advertising investment (ROAI). Additionally, it is important to consider other factors when evaluating a trade promotion’s success, such as customer satisfaction and brand loyalty.