Collaborative Shopper Marketing
April 2020 | ISRAEL J. RODRIGUEZ, JR
Many CPG manufacturers are looking to ‘net revenue management’ which is a realization and reaction to over-dependence on cost-cutting and short term promotion dependence that boosts revenue for a while until it runs its course. As EY Consulting reported in 2017: “55% of consumer products executives feel they have become too focused on quarterly performance… they risk being trapped in a race to the bottom with price and promotion tactics that neither build sustainable business nor shopper relevant innovation”
In 2015 we wrote an article cautioning against the 3G Capital blueprint to cutting their way to profits. We asked then: “When indeed will the pendulum swing back to value creation?” Net revenue management is a welcome industry response that promises to marry both insights and analytics into a more strategic and sustainable approach to build businesses.
Traditional Approaches to Trade Spending
When it comes to annual trade promotion planning, most brands focus on being competitive. More than just repeating last year’s promotions, this includes taking stock with qualitative & quantitative benchmarking of past promotion effectiveness in context of category trends, competition and retailer demands. It’s externally focused to ensure brands and retailers don’t fall into competitive disadvantage.
Many brands augment this with in-depth financial quantification. This is internally driven by marketers seeking to manage their portfolios or finance hoping to rationalize spending in hopes of trimming fat but unavoidably cutting some muscle as well. This quantified approach takes many forms depending on objectives:
The annual tug of war between remaining externally competitive versus meeting internal financial pressures is a source of friction for any brand not blessed with being in high growth mode or still enjoying the honeymoon of initial investment.
Certainly for some retailers in some categories, it’s still all about price discount: “Price, price, price. It's always about the price.”
In a surprising number of categories from food to HBA, upscale to mass marketed, retailers tell us they invite a more strategic and creative approach to build their categories sustainably and not just rent shoppers.
“For promotions to be most effective… have to target specific shopper base. Love to get those insights.”
“As (product) quality increases, more education /creative promotion is needed.”
“(Want) more entertaining promos… any and every way possible. Media, social network, print, etc.”
Source: Edgewood trade probes with buyers & category managers at leading FDMC retailers
We prefer to take an integrated approach we call Retail Marketing Mix Optimization or RMO™, that begins with understanding both partners’ strengths, objectives and challenges to fully maximize results including and beyond traditional price-discount promotion.
Our approach has redirected over $2.5 billion in trade spend and generated award-winning results for innovation, savings, growth and ROI for our clients and their retail partners.
To learn more, contact us at 973 644 9788 firstname.lastname@example.org.