Worksheet: Set trade-spend rate targets by account and product

When the budget is last year plus growth, the money goes where buyers ask for it. This sheet sets a target rate for your top ten accounts and top twenty products. It then builds next year's budget from those targets before the retailer's ask arrives. It builds the Competent step of the check:

Trade and promotional budgets are set by account and by product with a target rate, and the biggest accounts have a product-level plan.

The trade-spend rate is total trade spend divided by gross sales. Count every term, promotion payment and allowance.

Step 1. Rates by account, top ten

Account	Gross sales ($)	Trade spend ($)	Rate today (%)	Rate change on last year (points)	Gross sales growth (%)	Target rate (%)	Reason for the target
e.g. Grocer A	$80m	$24m	30%	+1.5	+2%	29%	Rate rose faster than sales

A rate that rises while sales stand still is the first place to look.

Step 2. Rates by product, top twenty

Give each product a role first. The target rate should differ by role on purpose.

Product	Role (grow, hold, harvest)	Gross sales ($)	Trade spend ($)	Rate today (%)	Target rate (%)
e.g. 1kg family pack	Hold	$12m	$4.2m	35%	32%

Step 3. A product plan for each of the three biggest accounts

Account	Product	Planned gross sales ($)	Planned trade spend ($)	Rate (%)	Net sales ($)	Promotions planned

Step 4. Build the budget before the ask

Add up the product plans. Write the budget before the retailer's terms letter arrives, so the ask is measured against your plan.

Account	Budget from the plans ($)	Last year ($)	Change ($)	Retailer's ask, when it arrives ($)	Gap to the plan ($)

A business under 50 people: set a target rate for your five biggest accounts and ten biggest products. Answer the retailer's next ask from those numbers.

Done when: your top accounts and products each have a target rate, and the biggest accounts have a product plan behind next year's budget.

Adapted from our own trade investment programme proposal (PSP, 2005).