PPM enables retailers to understand the ways in which different products perform throughout the product life cycle and in front of their customer, and to allow them to maximize their margin opportunity by making better, more informed decisions.
Common retail operating structures (buying, procurement, merchandising, marketing, and distribution) all perceive products differently and use different metrics to manage their activities. We see that the biggest friction is between the marketing department and the rest of the organization as it is very difficult to break down marketing efforts into SKUs, and to make the SKU level data actionable in marketing.
The business implication is that the true cost of promotion is not calculated into product margin, which leads to over investment in bad products and underinvestment in potentially good SKU’s.
Product Performance Management overcome the difficulties described above by combining product data across marketing channels with business data about SKUs to create a combined view of true product performance. This can be used to drive marketing efforts or support critical business decisions (e.g. pricing or purchasing of products).