Trade Promotion Management (TPM)
Trade Promotion Management (TPM) structures and controls the implementation, administration, and evaluation of pricing activities such as promotions and rebates.
Because rigorous product cost controls are now so commonplace and successful in the manufacturing and distribution segments of the supply chain, managing pricing activities is the last, best way to positively affect the profit margin and establish effective selling prices.
One object of successful business is to sell at an optimum price, a price that is low enough to capture all possible sales but high enough to produce an attractive profit margin.
Arriving at that effective selling price is the object of a successful pricing plan. The four components of the effective selling price include: product costs, margin, discounts, and list price.
A promotion is a transaction that causes an organization to give some form of discount. A promotion can be an operation over a short or long period of time. The promotion can have many reasons for existence and can be described in many different ways. Within TPM the promotion is used to either vary the discount shown off invoice or to retrospectively pay discount in the form of a billback, chargeback, or deferred claim, or to pay lumps of money that are required to facilitate commercial transactions. Examples include slotting fees, market development fees, new line fees, and so on.