CPGmatters: ConAgra Boosts ROI through Better Measurement, Forecasting
Through a special arrangement, presented here for discussion is an excerpt of a current article from the monthly e-zine, CPGmatters.
ConAgra Foods instituted best practices in coupon measurement and forecasting four years ago to improve ROI on this part of its marketing spend, and has since posted strong increases. Now the maker of Healthy Choice, Hunt's and Banquet brands wants the CPG industry to similarly embrace best couponing practices and use performance benchmarks shared by third-party analytical vendors such as IRI, Nielsen, PDI, IFX, MMA and Marketing Analytics.
"There's a knowledge gap in CPG," Rick Abens, director of advanced analytics, told CPGmatters.com in an interview. "If people really appreciated the analytics behind effective couponing, they could strengthen their brands. Enacting best practices could increase ROI on coupon spend by 10 percent.
"Most of our modeling vendors report a 60-70 percent ROI in the short-term, and about 100 percent over a longer two- to three-year period because of repeat sales. Performance varies extensively by category and by detail of the promotion (face value, purchase requirement, season, and time to redeem)," he said. Abens is also vice president-research for PMA, the Association of Integrated Marketing.
As companies such as ConAgra improve their ability to measure and analyze coupon performance, they also become better predictors of demand. Through this knowledge, they're better able to manage logistics, balance sheet and P&L statements. And with retailers, they can better secure shelf placement of brands and raise confidence in the effectiveness of their couponing events. "More strategic data sharing produces synergistic insights," he said.
Coupon analytics are most important to brands ranked number two, number three or lower in their categories, according to Mr. Abens, because "these brands need to use coupons to help become a more preferred choice of consumers versus the leader. Coupons also help brands reduce the price gap that exists between them and private label, and lessen the likelihood they'll lose any shelf facings to store brands."
These disciplines are also key to brands in "expandable" categories which people buy infrequently, less than once a month, but will use more if in their pantry (such as packaged meals and cereal), he contended.
"Consumers are consolidating trips to save on gas, and they're planning more as the economy is tanking. With more stock-up trips and fewer quick trips today, brands need to get on the shopping list in the planning phase at home - and that occurs when they review the weekly freestanding inserts and circulars.
"If you get on the shopping list with coupons," he continued, "you can take the consumer out of the market for an entire purchase cycle so your brand wins and others lose. Otherwise, your brand will have to wait another purchase cycle - when the consumer is back in the market for your category - to compete for a purchase."
Discussion Questions: What do you think of the opportunity in establishing shared performance metrics around coupons? What are the challenges of such data sharing and analysis?