Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
Optimization has been the key goal of trade promotion practice since 2000 as CPG manufacturers have worked to make their spending as efficient as possible, according to a new study, Transforming Trade Promotion/Shopper-Centric Approach, from Kantar Retail. But the consultancy claims, while efficiency is a sine qua non of modern trade, the real frontier lies with the shopper.
The report explains that CPG companies must consider how they can reach shoppers along the path-to-purchase. Industry leaders will be able to influence shoppers as they choose the outlet, shop the store and ultimately select which products to buy. The new challenge in trade promotion will be learning how best to steer one's organization along this shopper path.
"Transforming trade promotion into a shopper-driven marketing investment designed to influence behavior along the shoppers' path-to-purchase will become the common language that aligns successful trading partner relationships in the next decade," said Mike Urness, managing director at Kantar Retail. "In this environment, transforming trade promotion should be the number one issue to improve for both manufacturers and retailers."
As shopper-centric trade evolves, CPG companies will confront a host of new issues. Shoppers are reacting to economic conditions by making fewer trips and cutting costs. Traditional trade promotion has become less relevant as retailers focus increasingly on price.
To address these new challenges, Kantar Retail has provided specific
recommendations and best-in-class case studies to guide the way to successful
trade promotion practice. The study identifies four strategic pillars that
underpin path-to-purchase marketing:
- Possession of unique consumer insights will enable manufacturers to initiate appropriate planning conversations with their trading partners.
- Manufacturers must collaborate with retailers to broaden their frame of reference beyond the category; a broader view will make the manufacturer more valuable to the retailer and will result in wins for both parties.
- Marketing capabilities are fundamental to shopper-driven trade; manufacturers must stay abreast of the latest technology to woo consumers.
- Funding reallocation must occur so that price dollars and shopper marketing
dollars are each used as effectively as possible.
The study, based on more than 250 responses from a variety of retailers and manufacturers, found that trade promotion among consumer packaged goods companies is a $176 billion dollar business. Spending has risen more than 60 percent since 1997, and the percentage of manufacturers' marketing budgets devoted to trade has reached an all time high of 56 percent.
Discussion Questions: How would you transform trade promotions? Do you agree on the need to shift trade promotions towards path-to-purchase marketing? What are the main obstacles to doing so?