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ABI Offering Millions to Distributors for POS Marketing Promotions

  
  
  

Why is A-B/InBev Offering Millions to its Distributors for POS Marketing Promotions?

In our previous blog – December 13, 2015 – we looked at Anheuser-Busch InBev’s (ABI’s) new incentive program which ABI estimates will offer participating distributors an average annual benefit of $200,000 each, with as much as $1.5 million annually for some of ABI’s largest distributors.

For our take on this program, please refer to the previous blog:

A-B/InBev (ABI) Offers To Pay Distributors For Their POS Marketing

What Problem Is ABI Trying to “Fix”

Today, I'd like to to take a look at why ABI chose as one of the pillars of its new marketing plan to support a distributor’s contractual marketing support spending by covering up to 75% of the retail promotion and display costs for those distributors if 98% (by volume) of the beers they sell are from the ABI portfolio.

According to the Wall Street Journal, ABI’s stated purpose for the marketing cost reimbursement plan is to “reverse declining volumes in the US” by encouraging distributors to reduce the number of non-ABI brands they offer their customers.

Apparently, the thinking is that one of the reasons for the declining sales volumes of ABI’s beers is that distributors are not focusing sufficiently on the ABI brands, choosing instead to focus too much on non-ABI brands.

Perhaps, too, ABI imagines that the distributors need to increase their use of and spending on retail promotions (POS) as a way to stimulate more sales.

Yet, many distributors see this incentive program as meaning, at least in part, that ABI believes the distributors should greatly curtail or stop marketing and selling beers from the exploding list of craft breweries; and, of course, reduce or stop selling non-ABI imports, too.

ABI may be assuming that should a significant number of their over 500 distributors drop some or all of their craft and import offerings it will reverse the ABI sales decline especially of the macro-brews Bud and Bud Light. Such a reversal could increase ABI’s market share from its current 45%, perhaps even back to its former near 50% market-share status. At the very least, one could easily conclude, ABI  at least  wants to stop their volumes from declining.

Will ABI’s Approach Work?

Could this strategy actually work?

Well, like most questions, the most accurate answer is “it all depends.” Our answer to that question, based on conversations with beer distributors and personal observation, is “maybe.”

Several – and it is perhaps even more accurate to say “many” (see resources, below)– studies have shown that there is a lack of conclusive proof that at-retail alcohol advertising increases overall levels of aggregate consumption among both adults and young people. However, according to at least five studies (that I could find) on the impact of alcohol advertising at the point-of-sale: Advertising has a measurable effect on market-share for brands and a substitution effect between brands. And, as noted, ABI is seeking to regain lost market share

Although the amount of advertising for all beverage types has increased dramatically over the past century, government data shows that the consumption of beer, wine, and spirits in the United States has remained relatively constant. In fact, per capita consumption levels in the year 2000 did not differ dramatically from those during the year 1900. Again, advertising has a measurable effect on market-share for brands and a substitution effect between brands.

On the other hand, according to the CDC, “Point-of-purchase (POP) [i.e., at-retail] marketing, including alcohol advertising and placement, can increase alcohol sales and consumption substantially.” Also, CDC studies have concluded, “POP marketing can increase beer sales [vs. not having POP marketing] by as much as 17% and influences consumer purchase behavior, as 70% of a buyer's purchasing choice occurs after the buyer enters the retail establishment.” The CDC studies also note, “Persons aged 21-27 years are more likely to purchase beer in convenience stores and liquor stores than in supermarkets and drug stores [where POP promotional materials are prevalent].”

ABI’s Historical Utilization of POS Advertising

Anheuser-Busch, as I learned at the following link, has a long history of successfully utilizing POS to sell its products.

ABI – Our Heritage and History in Marketing and Advertising

As I put all of the scholarly, business and promotional publications I had researched on my desk, what struck me was that POS has now come full circle - Starting in 1852 and growing rapidly until Prohibition, then starting all over again in 1933; Then gaining steam until 1950 when emphasis began building in the fledgling visual media, TV; Then once again beginning somewhat of a shift back to local point-of-sale marketing.

Things began to gain headway with the explosion in the number of TV channels and the proliferation of DVR’s, permitting TV advertising to be skipped by a viewing public not willing to tolerate programming interruptions.

Conclusion: POS Marketing is More Important Now than Ever

Having all of the above as the prequel, it is easily concluded that POS is more important now than it has been in well over a couple of decades. And, by more than one account, it is possible that increasing the quantity of beer POS is likely to increase a brand’s market share, if not the total demand for beer, generally speaking.

But, it bears noting that US beer shoppers and consumers today have between 13,500 and 20,000 unique beer brands to choose from (NBWA data), and the most impressive “style” of beer growth over the past decade has come from craft brewers.

Craft sales have grown, recently, at nearly 20% year-over-year while the macro-brewery brands have seen either virtually flat growth or, in some cases slow but steady decline. Given this reality, it is hard to imagine how POS marketing can and will stop, let alone reverse, macro-brewers declining sales volumes.

If we had reached a point of craft saturation – where very few new craft breweries and brands were coming to market – I could argue the case for the growth of ABI’s sales of Bud and Bud Light if for no other reason than the expansion of the population.

Yet, all available evidence suggests craft is nowhere near saturation. After all we’ve grown from 96 US brewers in 1977 to an estimated 4,144 brewers in 2015 (Brewer’s Association data, December 2015). 

If ABI’s distributors could, financially, afford to sell 98% of their volume from ABI’s brand portfolio, evidence suggests their competitors would be the likely beneficiaries, picking up the ABI distributor’s jettisoned craft labels and fulfilling swelling market demand for craft.

Essentially what we are witnessing is the limitation [based upon] the extent of the market (Adam Smith, “Wealth of Nations,” chapter 3, page 24). Fundamentally, this suggests that US demand for macro-brewers lagers and light lagers appears currently to be at maximum. 

POS probably can increase the market share of Bud and Bud Light (vs. MillerCoors competing brands, for example). What is much less clear is if POS would actually prevent the steady encroachment of craft beer as a percentage of the total US beer market.

After coming to the above conclusions, what is clear is that what is needed is not just more POS, but POS-tracking – to help speed POS to market and reduce POS waste, POS-measurement – to find the positive correlations between POS initiatives and sales, and POS-management – to provide suppliers, distributors and retailers with actionable information and to assure the middle-tier receives all available incentives from ABI and other supplier’s marketing support programs.

To learn more about OnTrak Software’s digital tools to track, measure and manage your investments in POS Marketing, please click the following button:

 BeerCompanies

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Resources:

Center for Disease Control (CDC) MMWR Weekly (various) - cdc.gov/mmwr

Anheuser-Busch Heritage - anheuser-busch.com/index.php/our-heritage/history/marketing-and-advertising/

Wall Street Journal (WSJ) December 4, 2015 - wsj.com

Whitepaper: “The effect of Point of Sales Promotions on the alcohol purchasing behavior of young people in metropolitan, regional and rural Australia” Published online: 06 Sep 2011 -ro.uow.edu.au/cgi/viewcontent.cgi?article=2155&context=artspapers

Beer Business Daily November 23, 2015 (subscription required) - beernet.com/publications_daily.php?id=3645

Industry Views on Beverage Alcohol Advertising and Marketing World Health Organization (WHO) - icap.org/portals/0/download/all_pdfs/Other_Publications/WHO_paper_annexed.pdf

“Wealth of Nations,” Adam Smith 1727-1790 (Great Mind Series) Chapter 3, page 24.

Research Report: “Alcohol point-of-purchase advertising and promotions: prevalence, content and targeting” online from POPAI - popai.com/uploads/downloads/Research-Alcohol-POP-Ads-Promo-2004.pdf

The Importance of POS Marketing in Demand Management and Forecasting

  
  
  

The Importance of POS Marketing in Demand Management and Forecasting

The Importance of POS Marketing in Demand Management and Forecasting resized 600Recently I was having a conversation regarding business analytics with a large mid-western beer distributor’s purchasing manager.  His job, as he explained it, is Math: “Demand management – and forecasting.”

Fundamentally, the job is to make certain the distributor has enough inventory on hand and on the way (with a known delivery date) in order to have as little inventory as is feasible but at the same time retaining a very high service level.

The goal of course is to reach 100% service level; although, in reality the carrying costs required for a 100% service level would noticeably decrease profits. So the technical service level goal used for calculations is something less than 100%. On the other hand, it should be noted that for products in high demand, a service level drop to about 92% will result in a reduction of overall revenue of 4% (Note 1).

Key Factors

Factors such as lead times, item’s seasonality, growth trends, new product introductions, and substitute products all figure into the job of purchasing manager. Other factors affecting demand are increasingly important, including retail pricing incentives and promotions are always in flux, and it follows that demand management and forecasting is, on a good day, a constantly moving target. Yet, with profit margins under pressure from all sides, proper demand management can have positive and profitable outcomes for distributors.

POS Marketing and Demand Management

Today, much more so than in previous periods, better demand management really is critical in helping to gain the extra pennies (or so) per-case saved – or perhaps earned – that distributors are looking for. And, increasingly, demand management involves yet another variable: Point-of-sale (POS) marketing and promotional programs designed and implemented with the goal of increasing demand, often within a few days of POS promotion program launch.

Collecting POS data and correlating it to item sales data certainly facilitates the effectiveness of the distributor’s purchasing manager; but, probably of greater importance is the distributor’s ability to collect and report on POS data thereby helping determine the impact (and ROI) of distributors’ shopper marketing initiatives. In short, both purchasing and sales managers will benefit from tracked and measured POS marketing programs.

POS Marketing and Forecasting

As you know, beverage alcohol distributors’ sales and purchasing functions rely heavily upon forecasting to help predict future sales (and assure high service levels). Today, more than ever, forecasting requires that all data-points influencing decision making are recorded and at hand. In the past decade it has become even more important to know demand patterns, economic factors, competitors’ movements and the impact of pricing – perhaps the key component of POS marketing content.

Until the advent of OnTrak’s digital tools, such as SignTrak, MenuTrak and PermaTrak, very little granular data pertaining to POS promotions was even captured, let alone able to be used in the forecasting formulas distributors rely upon.

Until the advent of POS applications such as those mentioned above, ordering and tracking tools were virtually non-existent and therefore the impact of POS marketing was relegated to the qualitative and subjective realm – essentially anecdotal observations – not the quantitative realm: employing correlation or causal statistical methods. Now is the time to look into OnTrak’s suite of digital tools for today’s beverage distributors.

To learn more about OnTrak’s digital tools for tracking your POS Marketing and positively impacting your demand management and forecasting activities, please click this button:

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Note 1 - Grocery Manufacturers Association Study, 2002; URL:

http://itsoutofstock.com/wp-content/uploads/2013/04/GMA_2002_-Worldwide_OOS_Study.pdf

AB InBev Offers to Pay Distributors for Their POS Marketing

  
  
  

AB InBev Offers to Pay Distributors for Their POS Marketing

An Offer They Apparently CAN Refuse

St. Louis Confidential

As reported in the Wall Street Journal (WSJ) - December 4, 2015:

“The world’s largest brewer last month introduced a new incentive program that could offer some independent distributors in the U.S. annual reimbursements of as much as $1.5 million if 98% of the beers they sell are AB InBev [ABI] brands. This according to two distributors who requested confidentiality because they were asked not to discuss the plan. Distributors whose sales volumes are 95% AB InBev brands would be eligible to have the brewer cover as much as half of their contractual marketing support for those brands, which includes retail promotion and display [POS] costs.

AB InBev, which introduced the plan at a meeting of distributors in St. Louis, estimates participating distributors would receive an average annual benefit of $200,000 each.

The company, which has more than 500 distributors nationwide, said the incentive program is part of a three-year plan to restore growth in AB InBev’s most profitable market. It includes additional marketing and sales commitments of about $150 million next year.”

The St. Louis Confidential-Incentive Plan or what we’re calling “SLCP” is part of ABI’s new incentive plan to stop and hopefully reverse its declining US sales volumes. Once commanding nearly 50% of US beer market share, ABI’s output has declined by 11 million barrels since 2008 placing ABI, still huge by any standards, at a reduced market share of “only” 45%. Craft, once barely a footnote in annual beer production reports, has grown to an 11% market share as of 2014 (according to Brewers Association data).

The WSJ article spends a fair amount of column real estate discussing what are termed as “competition concerns", going so far as to suggest that craft brewers fear that ABI’s POS incentive program (SLCP) could “squeeze out America’s craft brewing industry” or constrain US beer distribution (and distributors).

On the one hand, I do understand how craft brewers could come to the conclusion that they will be under new (and unfair) challenges for shelf-space because ABI’s SLCP will be backed by the financial clout only ABI can bring to beer marketing.

On the other hand, it is difficult to imagine that many distributors will jettison popular and profitable craft brands in the hopes that beer buyers and consumers will switch back to Bud Light from a craft brewed IPA, for example. As one consumer remarked, “Bud Light and Ranger IPA or Zen are simply not fungible products, beyond all being beers, that is.”

According to another source, Beer Business Daily (November 23, 2015 issue):

“First round of reactions from A-B wholesaler readers are coming in. Says one: ‘Already hearing that few [ABI] wholesalers will change unless they're already at or near 98%. Why would anyone in their right mind, give up the long-term success of a brewery in a category that’s up double digits [craft] for a partner that just bought SAB? The best way for AB to get us to 95% is not to ask us to jettison our craft brands or decline potential new ones, but simply to sell more of their beers.

We'll stay pat.’"

On the other hand, as of December 4, 2015 (WSJ), at least one distributor, Grey Eagle Distributing, St. Louis, has dropped a craft brewer because of the SLCP incentive program. According to the dropped craft brewer, Deschutes Brewery, Grey Eagle decided to drop Mirror Pond Pale Ale because the distributor “. . .had to make a choice to go with the incentive program or stay with craft.”

Yet, several ABI distributors (who wish to remain anonymous) I’ve talked to have basically echoed the comments above from Beer Business Daily, one of them saying,

If Bud Light, for example, would be purchased in equal measure to what I lost by dropping craft, it would be almost a miracle. The issue is our market probably consumes a little less than 10 million case-equivalents of Bud and just over 1.2 million case - equivalents of the crafts I distribute. Simply dropping the crafts from my sell sheet would not likely cause an equivalent increase in my sales of Bud Light. I mean Bud and the crafts just aren’t interchangeable products. In fact, Miller even has TV commercials that makes fun of people who say ‘I’ll have a light beer, any light beer, when what they should have said was I’ll have a Miller Lite beer,’ suggesting that Miller Lite is a completely different product than other light beers.”

“What would happen is that another WD in my city would pick up the craft I dropped and my competitor would ramp up sales to our market demand of 1.2 million cases, meaning the revenue dollars would now go to my competitor rather than to me. Maybe I would sell a little more Bud Light than I did before – but that's a leap of faith most ABI WD owners aren't willing to take these days.”

Where Does OnTrak Software Fit

Now, we know at least one thing – we don’t have a crystal ball. We also know something else. Regardless of your adoption of the St. Louis Confidential Plan to take ABI up on their new POS incentive – or expense recovery – program, or not, there is something to consider.

You will be placed in the best possible position of all to make the most of your decision if you have a digital tools that helps you Track, Measure and Manage your investments in retail promotion and display costs (your POS), not simply the ability to order POS almost as an afterthought.

That being said, should you choose to embrace the new incentive plan, it will be incumbent upon you to have the data at the click of a mouse that our digital tools like SignTrak and PermaTrak captures and reports on in order to maximize your POS expense recovery and ROI.

On the other hand, should you choose to “stay pat” and work with your craft and import suppliers, you’ll want to be able – with equal confidence and ease – to report on your marketing support of their brands, and lobby for their participation in-kind.

For more information about OnTrak Software and the digital POS Tracking software tools many ABI beer distributors are using, please click this button:

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America’s Year of Beer – 2015 – Winning with POS Marketing

  
  
  

America’s Year of Beer – 2015 – Winning with POS Marketing

America’s Year of Beer – 2015 – Winning with POS Marketing resized 600Recently I reviewed some of the information published by the NBWA about beer, including brewing (suppliers) and distribution. Also, as a subscriber to Beer Business Daily, I regularly review additional content from BeerNet . I also consult several other sources for information pertaining to the US Beer Market, including: Brewers Association, datatante  and Beeradvocate.

The Number of Brands

According to these sources, there were somewhere between 13,500 and 20,000 unique beers (sku’s) available for sale to US beer drinkers in 2015. The number of new beers and new breweries coming on line is indeed impressive, too.  It is accurate to say that beer choice is currently under little, if any, threat of being consolidated. In some respects, beer brand and product diversity – shrinking at more than one point in time since the repeal of prohibition – is now exploding.

The Growth of Breweries

Here’s a quick overview of why the availability of beer labels is growing so rapidly. Technically, in 1932 there were 0 (zero) breweries in America. In 1933, however, after the repeal of prohibition, the number of breweries grew to 331. And, while going from 0 to 331 may seem impressive, in 1919, the year before prohibition was enacted, there were 669 breweries. In the interests of brevity, here’s a table showing the progression of the number of US breweries:

Year

# Breweries

1933

331

1942

523

1957

210

1977

96

1992

359

2005

1,447

2014

3,464

2015 (est.)

4,144 (Note 1)

Brewery growth during 2014 was on a nearly 19% annual pace, and over the past several years, every year saw brewery growth climb at a higher percentage rate than the previous year. At the same time, major beer brands from AB and MC, while still dominating sales, were trending down while crafts began building on their meager footholds to grow by about 18% and even imports grew by nearly 7% (as compared to the overall market growth of just .5%).

You would be correct in assuming that such growth of craft and imports in a virtually flat growth overall beer market came almost entirely at the expense of the sales of beer from the big national brands like AB and MC (macro-breweries). Craft – not too long ago, barely a footnote to annual beer production charts – grew to 11% of the US beer market by 2014.

Perhaps in response to the growth of craft – or perhaps just because it’s good marketing – AB produced what could be seen as a “defense against craft” ad: Click Here for Video >>

Of course, retaliation ensued from a plucky craft brewery: Click Here for Video >>

Winning with POS Marketing

The point is, since the repeal of prohibition, the beer landscape has undergone substantial changes and we have arrived at a point in time where the American consumer is faced with at least 13,500 beer brands from about 4,000 breweries; and the consumer’s appetite seems to know no limits. We’re currently enjoying a cornucopia of choice when it comes to our favorite libation – and all indications are for the number of choices to keep on growing.

For many local and possibly for even some regional beers, word-of-mouth “advertising” will probably be insufficient to keep attracting new customers. That is, word-of-mouth promotion will unlikely be enough to compete with the seemingly weekly arrival of new beers vying for both shelf space and shopper’s dollars.

Clearly in a market showing virtually no signs of saturation, beer sku’s – representing both new and existing brands – will only be able to survive, grow and prosper if retail promotions are tracked, measured and managed using digital tools that stimulate shopper demand and provide readily available point-of-sale (POS) marketing data to correlate to product movement data at both individual and aggregate retailer locations. The deployment of such tools will facilitate the analysis of retail promotional activities to see if POS initiatives are meeting sales objectives and ROI targets.

In other words: Since beer (and other alcohol beverage products) stands in the virtually unique position of being marketed at-retail using materials and campaigns developed and delivered by beer wholesalers, it can be concluded that the most successful brands (and distributors) will be those who encourage the adoption of currently available digital marketing tools to manage their promotional spending to achieve optimum ROI on their POS spending.

For more information about OnTrak’s digital tools for beer distributors please click this button:

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Note1: 2015 Brewers Association data

NBWA Reflection: POS Tracking Software More Important Than Ever

  
  
  

NBWA Reflection: POS Tracking Software More Important Than Ever

As I write this, we have just returned from the 2015 NBWA Convention in Las Vegas.

First, our gratitude to Craig Purser and his team for another job well done!  They are the best in the business for helping us get in direct contact with beer wholesalers that need our POS Tracking and Line Cleaning Software solutions. Thanks Craig! 

More Beer Brands Means POS Marketing Software Is Even More Important resized 600The Amazing Number of New Brands

One of the key things that caught my eye again this year was the ever increasing availability of beer choices offered to the US retail beer buyer: Now well over 13,000 named brands.

Thirteen-thousand!  Let that sink in just a moment.

One of our greater-Cincinnati party stores probably has 1,300 beers to choose from. And, although the number of new craft beers continues to be added to the store’s inventory faster than I can keep up with, the number of beers sold only appears to be growing steadily, but not necessarily at great speed. 

Perhaps by Christmas, the number available under one roof will have climbed by another 50 or so, then after the holidays there will be some that go away, never to return; and then some new brands that will be added. There is growth, but I don’t see 13,000 beers for sale at one retailer anytime soon. I would imagine that the number of beers at this retailer may approach 1,450 by fourth-quarter 2016. But, come to think of it, this is much too large a number, all in the same place at the same time, for most of us to get our heads around. 

Thirteen-thousand different beers – it boggles the mind, but 1,300 beers are also daunting.

Take a Look at a Grocer’s Bar

This month, a new Super-Kroger’s opened in Cincinnati.  Have you heard about the “Market Place” concept?  This Kroger’s is larger than three football fields laid end-to-end.  Inside, near the center, this Kroger’s has an impressive bar with some 12 taps, and the beer on-draught changes regularly and frequently. It also has one those “eno-tap” contraptions of tubes and faucets allowing wine to be “tapped” from up to 12 different bottles and delivered in two-ounce pours. 

All this considered, the infrastructure and design elements taken together, this “island” inside this enormous Kroger’s store, is larger than many stand-alone bars that I have been to over the past 30 years. Flights of beer and wine seem to be the first thing patrons go for, followed either by a full glass of wine or mug beer; next followed by the ritual filling of what looks to be an infinitely large supply of “growlers”, initially supplied at no-charge for beer-buying customers.

Twelve different beers on tap, twelve different wines on tap – even this much variety and taste-ability can almost overwhelm.  And, get this, the in-store bar also serves “light-bites”, elaborate cheese plates and tiny gourmet sandwiches specifically chosen to compliment the beer and wine choices offered. Most of the half-dozen “bar tenders” seemed to know nothing about the tap beers, and even less about the wines. However, there was one guy who was on the ball, and available to describe the various beers, and one would presume, also has some wine skills, too.

Point-of-Sale (POS) Marketing Could Really Help

Talk about your POS marketing – the entire set-up was designed to promote the products and also be the point of sale for choosing the beverages you planned to take home with you. 

Well, I sat there sipping my beer flight  and marveled at what this entire “alcohol island” must have cost to build and how much it costs to maintain with, one, two, three, four – five employees, plus the guy who really knew the products. 

Then I noticed two guys, approaching the bar, pushing a hand truck carrying a new barrel. These gentlemen weren’t wearing the Kroger golf shirts like the other folks behind the bar.  No, these guys were wearing different colored golf shirts that I identified as they closed in. The new peoples’ golf shirts were embossed with the logo of a prominent Cincinnati beverage alcohol distributor.

Imagine that: Kroger’s has its own wholesale distributor (WD) sales reps keeping the Kroger taps flowing. This means these folks were not on the Kroger payroll, but apparently were “on site” on a Saturday night to ensure the beer would not stop flowing.  I don’t know if the distributor helped Kroger’s pay for the bar within a grocery store concept, but it certainly seemed that the WD’s reps were given complete freedom to pull the empty barrel and start a new one and even interact with Kroger’s patrons. These WD reps were treated as fellow employees as far as I could tell.

When I ask certain questions about the extent to which goods and services are treated as POS, I sometimes feel I get evasive answers, almost as if what I am asking is, somehow, a bit of a gray area. One thing that I know is that the tap pull handles are supplied by the beer WD’s as are the table tent/menus listing the bistro’s light bites. And of course, the two reps, even if they are simply on-loan from the beer WD aren’t working without pay.  Is all of this expense not considered POS? Looks like POS to me.

Who’s Paying for All This POS?

Once again, my head started spinning and it wasn’t from the 10% ABV craft beer I was imbibing. Rather my head was spinning as I contemplated what certainly seemed to me to be perhaps the most expensive POS I have ever seen. If the bar’s construction costs were somehow lessened by the WD – and I have to assume there was at least some form of “help” offered by at least one of the various WD’s whose products were for sale – then what we have inside this grocery store is an investment in both permanent and temporary POS made by and continuing to come from at least one if not more WD’s.

And Who’s Tracking and Managing These POS Costs?

Of course I wondered if any WD was tracking, managing and measuring the effectiveness of the POS outlay on display. My assumption is that marketing monies had been poured into the store long before the first shovel-full of dirt had been turned over. I imagine there is a quantifiable ROI on the distributor’s point-of-sale promotional spending at this store.  I also believe the distributor is acting based on blind faith and really has only a vague idea how much was and is spent to maintain what appears to be a long-term commitment to gaining brand dominance, one Kroger’s store at a time.

Here’s What’s Going On

With thirteen thousand beers on the market, the sales “winners” can only be, and will only be, those brands that track, measure and manage the vast outlays of capital required at the point-of-sale just to get noticed

Let’s face it, another $100 million spent on TV ads for either Bud or Miller beers haven’t really done all that much the past few years to “sell more beer” – either because everyone already knows Bud Light or Miller Chill, or because they don’t care what is advertised on TV, often fast forwarding through TV ads.

But when the beer shopper is actually at the place and time when a buy can be made, that is when advertising – POS – is “super-effective”.  Does anyone actually believe another $10 million Super-bowl ad for a well-known virtual commodity like light beer will move the sales needle anymore? On the other hand, time and again the data positively correlates POS marketing to an increase in sales.

It is long past time to wake up and start marketing like the big business that most beverage distributors today are. It’s now time to market at the point-of-connection between the shopper and your product; and, it needs to be accomplished using digital tools that provide the same degree of accountability and manageability as your order entry, purchasing, warehousing and financial reporting systems.

Time’s a-wasting.

How OnTrak Software Can Help!

OnTrak now offers 5 Digital POS Tracking Tools for today’s beverage distributors: SignTrak (for custom, temporary signage), PermaTrak (for permanent POS), MenuTrak (for custom beverage menus), SampleTrak (for beverage sampling), and our newest offering, LineTrak (for draught line cleaning).

For more information about our POS Tracking and Line Cleaning Software, please click this button:

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A Recent Customer Conversation About POS Marketing Management

  
  
  

A Recent Customer Conversation About POS Marketing Management - The Costs and Supplier Recovery

If this is your first time on our site, or first time checking out our blog, let me give you a very brief introduction to OnTrak Software.

About OnTrak Software

We are a point-of-sale (POS) marketing technology company that helps our customers – primarily beverage alcohol distributors – Track, Measure and Manage their investments in POS marketing materials using our suite of cloud-based Digital Tools. We call it POS Tracking Software.

For nearly ten years, our customers have been telling us that POS costs and speed to market are out of control – one’s too high and one’s too slow. One of the reasons for these twin negatives are the traditional paper forms for ordering, producing and delivering POS promotional materials just can’t keep up with the POS demands from suppliers and retailers.

While suppliers often have generous recovery programs designed to offset the distributor’s investment in graphics personnel and equipment, actually getting those marketing recovery programs to provide benefits to the distributor can require extensive reporting regarding the types and effectiveness of the POS initiatives.

OnTrak Customer Example

OnTrak’s suite of Digital Tools addresses all of these issues – but you probably figured we’d say that.  Let’s continue by discussing one of our real live customers, a “middle-plus” market distributor of beer, wine and spirits wholesaler covering several states and representing dozens of suppliers.

What Did Your POS Cost?

I recently asked our customer how much they spent on the POS orders they processed in September of this year. The answer was, “I don’t know off the top of my head, but I can get it for you in a couple of minutes.” Literally, a few minutes after I hung up the phone, I received an email from my customer, one of the larger medium-sized beer, wine and spirits distributors in the US, with the number $41,995.40. In the case of our customer, the dollar figure they noted was their cost for the production of a very specific type of POS marketing – menus: Mostly wine menus.

Typically we see “beer dominant” distributors spending on POS increase during the late spring and summer months and “wine dominant” distributors spending on POS spike during the last 3 or 4 months of the year – more or less tracking with the busy seasons for beer vs. wine and spirits sales. This customer is clearly wine dominant and uses our MenuTrak product to automate beverage menu creation and supplier bill-back recovery.

How Much Did You Recover From Your Suppliers?

Well, I couldn’t just let that nearly $42,000 cost figure stand without knowing how much of the expense they recorded would be eligible to be recovered from their various suppliers marketing allowance programs.

So, I asked our customer to tell me the amount recovered.

This time, the answer was given while I waited on the line: $41,972.87.

Nearly 100% of the cost?

I was on the phone, in total, about 5 minutes. I did ask how long this report would have taken without the business analysis report writer than comes with MenuTrak.  The response was: “Days. We wouldn’t have been able to run the report for a week or two after we closed the previous month; also there are virtually never any questions about the reports or the amounts detailed, everything is laid out by supplier, customer, product promoted and associated costs via the POS. Every detail a supplier requires is on the report.”

So, we have an over $100M beer, wine and spirits wholesale distributor who is able to account for what is advertised at the point-of-sale, when, how much the POS cost to produce, and how much of that cost is offset by the suppliers. The production of the report took less than 5 minutes.

The Bottom-Line Benefits Of OnTrak

This distributor uses the OnTrak products to place POS orders, track the flow of work through production and delivery, measure, record and report costs both to “internal customers” and externally to suppliers, ultimately allowing the distributor to manage the expenses of perhaps their second largest expense item, after payroll or fuel – POS promotions.

On top of these features, our customer is enjoying the benefits of improved POS accuracy – that is, there are fewer errors and reworks – getting their POS to market more quickly, and spending hours generating and filing recovery reports with suppliers, rather than days or weeks.

One additional and very much appreciated (but not planned for) benefit is the improved cash flow, with respect to recovery dollar settlements, due to the OnTrak recovery reports being able to be generated quickly, completely and accurately with all of the data required to generate quick settlements of recovery dollars due from suppliers.

OnTrak now offers 3 other Digital Tools for today’s beverage distributors in addition to MenuTrak: SignTrak (for custom temporary signs), PermaTrak (for permanent POS), and SampleTrak (for beverage sampling.

For more product information, or better still, to request a live demonstration of any of our products, please click this button:

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Start Tracking, Measuring and Managing POS Marketing Programs

  
  
  

Why You Need to Start Tracking, Measuring and Managing Your Point-of-Sale (POS) Marketing Programs

Fond Memories

It is increasingly unlikely that anyone reading this blog will actually remember the economy that emerged after World War II.

I was born in the early 1950’s, and although it is true that I was alive during the post war, post great-depression period, I mostly remember reading about, not living what it was like in the aftermath of the war.

“The World” of my earliest memories only goes back to the late 1950’s. My recollection of our economy is only of a growing economy and an optimistic society, fueled by the almighty consumer’s quest for “more and better”. I remember, or at least I think I do, the birth of the shopping mall – a wondrous place, a shrine to conspicuous consumption and the place to go to “see it all”.

At the same time, manufacturers and suppliers of all these ingenious new consumer products continued to accelerate production of “more” thereby providing hungry consumers with a seemingly endless supply of new, innovative products on which we could spend our newfound, post war “wealth”.

Those were the days of apparently boundless consumerism, both fueled and satisfied by limitless producer innovation – correct?

Not so fast.

Consumer-driven growth, then, just as now, is not simply the product of an industry’s capability and capacity to make bigger and better things.

I would argue that the prime driver – or what actually fuels growth – is marketing, and to put an even finer point on it, advertising.

The Good Old Days?

Here, in our blogs, we’ve exhausted our nostalgic perspective of last century’s nuclear family sitting around the TV watching the Ed Sullivan show or Ozzie and Harriet as the consumer goods manufacturers of the day injected their advertising messages directly into our collective cerebral cortex. In a typical evening of watching TV together, the entire family would see product promotions for consumer packaged goods, or what we now call CPGs, on the three available channels – ABC, CBS and NBC.

It didn’t even matter what network you watched. For the most part, the advertisements were identical on all three – we all knew Maxwell House was “Good to the last drop, and that “Winston tastes good, like a cigarette should”, no matter which network we watched. “Plop, plop, fizz, fizz,” and all that jazz.

Big brands were conceived, developed and launched via what we now call “traditional media” – and these big brands expanded nationally. With the vast majority of the population exposed nightly to the same messages, it was no wonder marketing or advertising is now credited with the meteoric rise of brands, including many of today’s giant CPG firms, including Kellogg’s, P&G and Anheuser-Busch to name a few.

The Better New Days!

Marketing and advertising today are even more important than ever before in the process of creating, building and maintaining brands.

The reason for this is that consumers are more fragmented now than they have ever been. So CPGs marketing programs have had to fragment, or segment in today’s market in order to retain their power and ability to inform and persuade the targeted market to buy.

In other words, “the primary engine" of our economic growth was and still is marketing!

And, the most effective marketing tool available to drive growth of CPGs is point-of-sale marketing –Targeting consumers at “The Moment of Truth” when a shopper becomes a buyer.

Any manufacturer who wants to establish or build a brand recognizes that we are currently moving through the “Era of the Shopper”. One of the hallmarks of this era is the rapidly declining effectiveness and increasing expense of traditional marketing: Declining effectiveness coupled with increasing expense is a recipe for free-falling profits.

What can you do?

Track, Measure and Manage Your POS Marketing Programs

If you’re a manufacturer, distributor, or even a retailer, one of the first orders of business in your quest to build and grow your brand or “increase sales”, is to begin to track and measure the impact of your point-of marketing or advertising.

It may have become a corny phrase, but it is true –

“You can’t manage what you don’t measure”.

Considering how little, if any, measurement of the effectiveness of point-of-sale marketing or shopper advertising is currently being done by CPG manufacturers, it seems obvious that there’s a lot of low-hanging fruit to be picked from the “tree of at-retail marketing”.

It may seem way too easy to say that “all you need to get started” down this road to optimized point-of-sale marketing is the selection of a couple of key performance indicators. Indicators that when correlated to sales, can suggest which of your at-retail marketing / advertising programs truly produce improved sales.

Finally, I’m going to let you in on another little known fact:

The software tools to enable you to automatically track, manage and measure your point-of-sale marketing / advertising programs are so inexpensive and easy to adopt you probably wouldn’t believe me if I told you what it costs to buy and implement them.

Give us a call and be prepared to be surprised. If you choose not to call, you’ll be missing out on a marketing game changer.

For more information about our point-of-sale tracking software, please click this button:

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The Changing Face of POS Marketing – Or At-Retail Marketing

  
  
  

The Changing Face of POS Marketing – Or At-Retail Marketing

How to Measure POS Marketing - POS Tracking SoftwareOne Thing We Know For Sure

There’s one thing that we should get out of the way from the start:

Marketing messages, delivered at the point-of-sale, are more important to increasing sales and building brand and product identity than ever before.

So, what do we mean when we say point-of-sale (POS) marketing?

For us at OnTrak, as well as with our prospects and customers, point-of-sale marketing – or just “POS” – means virtually anything that is used to promote brands and products to the retail consumer at the place where they buy.

This message has become stronger and stronger as we have met with more and more beverage alcohol suppliers and distributors over the nearly 8 years we’ve been in business.

Types of POS Marketing Materials

In the case of beverage alcohol, POS includes both temporary printed signage – typically produced by distributors in their own print shops, and permanent signage – acquired by distributors and loaned to their retail customers.

A broader definition and utilization of permanent POS materials includes displays, lights, umbrellas, glassware, mirrors, coolers, cabinets, table tents, chalkboards, logoed apparel, door pulls, tap pulls, coasters, bar-mats, corkscrews and bottle openers – and the list goes on.

Increasingly, food and drink menus – supplied and usually financed by distributors – and B2B product samples can also be considered POS marketing or promotion. Beer, wine and spirits B2C tasting events could be included in the POS marketing-mix basket.

The Cost of POS

It is true that some of the POS that distributors place is almost certainly a total waste of time and money – and it’s not an insignificant amount.

The average paper or Coroplast sign created by every beverage alcohol distributor in the US costs between $30 and $50 each. It is not uncommon for a 5-million case malt beverage distributor to generate between 10,000 to 25,000 signs annually. Many of our customers generate over 100,000 signs every year – and every year their cost of POS increases.

To put this in greater context, the beverage market comprises about two-thirds of the two-trillion dollar US CPG market. POS for these products certainly appears to be where the lion’s share of the approximately $20 billion per year, at-retail marketing expenditure is going.

So, why am I suggesting some POS spending is probably ineffective and wasteful?

Simply put, my opinions are based on both an assumption and an observation that most beverage alcohol distributors, and their suppliers, don’t have an accurate ROI measurement of their current investment in POS.

This despite the fact that there are POS tracking tools available, that when coupled with a distributor’s existing product, customer and route accounting systems, will provide them with the data necessary to measure the effectiveness of their retail marketing campaigns.

Here’s what is even more confusing: Distributors continue to increase their spending on POS because their customers and suppliers “urge” them to do so. In some cases it’s a mandatory requirement. On the one hand, the increase in POS spending is perhaps a good thing since POS does work to increase sales and brand awareness. On the other hand, this increase in POS spending may be unnecessarily wasteful since much of it goes unmeasured and unmanaged.

POS Works

But regardless of the costs, it is also true that POS works.

Many notable studies conducted by the ANA, AT Kearney, CGT, GMA, P2PI, POPAI, and Shopper Marketing Magazine have documented the effectiveness and efficiency of POS marketing for all consumer packaged goods. (See NoteThese impressive companies, have studied POS effectiveness, and their analysis proves that POS works.

We believe most beverage alcohol distributors use POS both offensively and defensively. But we also believe POS is really a competitive tool. So, while distributors may be increasing their spending on POS, they also need to track, measure and manage POS effectiveness and ROI, and recover more of these increased costs from their suppliers. If you’re not addressing the whole POS life-cycle, then you’re likely to be spending more and valuing POS less.

The Take-away

Today, the American consumer is much less likely to be stimulated into buying simply by seeing paper or permanent signs, mirrors or glassware displaying a brand’s logo. Part of the reason for this is the proliferation of the number of beers, wines and spirits. Craft beers and spirits have rapidly increased in number, and ironically both shoppers and consumers, who may not be the same person, now look to POS materials to educate and inform them about beverage products in the bottle, not just a creative name and logo. This same thinking can be applied to wines, now that we have surpassed 105,000 wine labels available to consumers.

Traditional, “image building”, POS may not be sufficiently influential today. With well over 200,000 beverage alcohol products, and many more non-alcohol beverages available to the American market, today’s beverage buyers at retail outlets, bars and restaurants are seeking more facts before they spend $11.00 on the latest and greatest 4-pack of beer, or $10 on a pint, to put a finer point on it.

The current opportunity is to use POS marketing as the most efficient way of communicating the information retail customers demand before they take a chance on your brand or product. If you use and measure your POS marketing materials appropriately and effectively, you will stand a much better than fighting chance of success.

How OnTrak Helps

I’d be remiss if I didn’t remind you that OnTrak offers a suite of POS tracking, measuring and managing applications (SignTrak, PermaTrak, MenuTrak and SampleTrak). These solutions can be deployed in a few weeks, and cost less than you might think. On average less than $15 per month per rep and merchandiser.

To learn more about OnTrak and our POS Tracking Software, please click this button:

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Note: ANA: Association of National Advertisers; CGT: Consumer Goods Technology; GMA: Grocery Manufacturers Association; P2PI: Path to Purchase Institute, POPAI: Point of Purchase Advertising International.

You’re Spending More on POS Marketing Than Ever – Now What?

  
  
  

You’re Spending More on POS Marketing Than Ever – Now What?

The State of Today’s Retail Marketing Technology - Or What OnTrak Software Can Do For You.

Every Beverage Supplier and Wholesale Distributor is interested in capturing more market share and increasing sales. By now, we all know: One of the best tools available to attain these goals is an effective and efficient at-retail marketing campaign - aka point-of-sale (POS) Marketing.

POS Marketing Technology to Track You POS InvestmentsPOS Marketing and the Beverage Industry

About six years ago, our research regarding at-retail marketing uncovered US annual retail marketing spending of over $19 billion. Similar research undertaken today identifies that current spending on at-retail marketing has grown to more than $25 billion – an increase of over 30%!  Now, your beverage alcohol company may not be spending 30% more on POS marketing today than it did in 2009, but it should not come as a surprise that you are very likely spending considerably more now than you spent then.

Based on several expert, retail marketing organizations’ research, it is also very likely you will be spending more in the upcoming years than you are spending now. This increase in spending is driven by the simple fact that POS marketing works to drive additional sales, often in the form of what POPAI calls unplanned purchases. This is especially critical for items where several substitutes are available to the shopper. Some of the best Consumer Packaged Goods to point to are beverages, since they make up nearly two-thirds of all CPG spending.

Assuming you agree that you spend “a lot” on POS marketing, what can you do to make certain you’re getting the best return on your retail marketing investment?

As we’ve said here before in our blog entries, you can’t manage what you don’t measure. Yet, measuring the impact of POS will be no less difficult than measuring almost any other data-driven function in your company – without the proper tools, that is.

The Impact of Technology

Retail Marketing Technology is the key to measuring the impact of your POS initiatives across brands, customer groups and of course across the various types and placement of POS materials. This means, for example, that your sales reps and marketing and merchandizing people can meet with your customers armed with accurate POS marketing data. Current and accurate data can then be leveraged to assist you in planning increasingly successful upcoming promotions.

As suppliers and distributors working with your retail customers, you may, over time, prove that your POS strongly correlates to an increase in retailers’ sales. This may then open the door for your reps to lobby for increased store inventory levels, decreasing the likelihood of outages of your brand.

With measured POS, suppliers and distributors both win – as do your retail customers and their customers.

Building the ‘Rep’ of Your Reps

A common perception in the world of beverage alcohol distribution is that a distributor’s sales reps can be perceived as spending more time ‘taking orders’ rather than ‘adding value’ to your customers by offering and selling your brands..

Adopting retail marketing technology is one clear way to build a sales representative’s credibility with your retail customers as more than an order taker or inventory control administrator.

The data your reps can provide will be, over time, seen by your customers as actionable, thereby helping prevent out-of-stock issues for the retailer. To restate: As the value of this POS marketing data is recognized, your retail customers will start seeing your reps less as order takers and more as providers of innovative marketing approaches. Your reps will become Sales Representatives in the most positive sense of that description.

The Right Answers for Your Customers, At the Right Time

As a supplier or distributor who invests in retail marketing technology, both you and your retail customers will realize greater sales productivity and capture increased market share. As a result, you will improve your capacity and capability to perform in the role of a consultative seller because you have measured the performance of your POS marketing campaigns and materials. The bottom line is that through the deployment of technology, including data-driven analytics, you and your sales reps can deliver the right POS marketing at the right time.

For more information on how you can find retail marketing technology solutions to help you help your retail customers convert their shoppers into click the following button:

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Why There Are No Ratings, Reviews & Pairing Suggestions On Wine Menus

  
  
  

Why There Are No Ratings, Reviews and Pairing Suggestions On Wine Menus

This blog entry continues the thoughts about adding information to your wine menus that were discussed in the prior blog entry.

Wine Menu   Wine List   Adding Ratings, Reviews & Pairing Suggestions resized 600So to continue the theme, I finally received some explanations as to why there is virtually no information (or ratings, reviews and suggestions) provided for wines on a restaurant’s wine menu – Even though these wines are often priced at hundreds of dollars per bottle.

I’ll let you be the judge, and invite your feedback, about the applicability of the explanations and the appropriateness of the explanations, including my own, in determining a course of action for your restaurant or, perhaps more importantly, your distributorship.

It Makes No Sense Not To Include The Information

With well over 100,000 wines marketed today in the US alone, my premise in the previous blog was that it makes no sense not to describe the wines on a menu in a fashion similar to the way the food items on a menu are described.

In fact, I’d go so far as to say, most people really don’t need much of a description for a NY strip steak, lobster or even a Berkshire pork chop on a restaurant’s menu. On the other hand, the description of a wine’s taste, rating and a suggestion of what it might pair well with, seems to beg to be included on the menu under the wine’s vintner, primary grape, vintage and retail price – especially on today’s hundred-plus bottles wine lists.

Here’s Some Reasons For Not Including The Information

An explanation of why there has been little to no information about the wine on the menu – even though it is quite possible that one bottle of wine is priced as much as or more than all of the entrees at a table – goes something like this:

Selling a bottle of wine in a restaurant increases the wait-staff’s interaction with customers, which will likely drive up check sizes. The key word in that explanation is “selling.” Most servers are well-versed in the food items on the menu; yet, it is not uncommon for servers to know little more than the differences between a red and a white and dry vs. sweet wines.

Recently I had a server suggest pairing red wine with meat and white wine with fish. I actually pity the server who, in the spirit of being helpful, makes a wine suggestion that turns out to be unpopular with a patron.

Nevertheless, according to restaurantowner.com:

“While a server is opening and serving a bottle, he can interact with guests, make food menu suggestions, and create opportunities for further sales. By freeing the bartender, you give him more time to spend with guests at the bar, which creates fatter drink tabs.”

Well, that much is undoubtedly true, but this certainly places a lot of pressure on a server to pick just the right wine for the meal – A server who may never have tasted most of the wines on the wine list, and can’t pronounce many of them.

That further explanation, from "restaurantowner," does go some distance in explaining why you might not want the wine menu to provide tasting, rating and pairing information about the wines on the menu. But, what is required to pull this off is a wait staff with at least some depth of wine knowledge, so they can make “informed” suggestions when asked “What wine would you recommend with our meal?” This may be the most dreaded question ever for many servers, I’d imagine.

A Sommelier May Be A Solution – Maybe?

Some, but not many, distributors have taken this “interaction with customers” explanation further still, suggesting that instead of putting some basic description of the wine on the menu, that the restaurant will sell more wine and increase interaction with their customers by employing a sommelier.

Not knowing, at least at first, what the going salary range for a sommelier is, I started looking into the subject.

First, I found an article in Forbes magazine – “Unusual Jobs That Pay Surprisingly Well”

According to this 2012 article, a sommelier earns $80,000 to $160,000 per year. Upon further review, I found salaries can actually be somewhat more affordable for a sommelier who has not earned the title, “Master Sommelier.”  An up-and-coming or “less experienced” sommelier can earn about $60,000 per year.

Here’s another tidbit:

There are only about 120 Master Sommelier’s in the US. My translation: Good sommeliers are a rare and hot commodity, and even inexperienced ones can be expensive.

I would assume that having a sommelier probably would increase a restaurant’s wine sales, perhaps dramatically. At those salaries, they would have to. Conversely, as I re-read the Beverage Dynamics April, 2015 issue regarding the impact of offering wine information as part of the wine menu, I focus on the claim of a 20% increase in wine sales simply by adding wine reviews, ratings and food-pairings to the menu. I also am reminded that, for many restaurants, the wine menus are produced for them by their wine distributors at no charge.

It seems to me that only a very few restaurants (less than 1%) are in the position to afford a sommelier; and, for those that can afford it; the ROI has to be there. For the vast majority (the other 99%) of white table cloth restaurants, perhaps – adding wine ratings, reviews or food-pairing information certainly would seem to be a cost effective way to increase wine sales, perhaps dramatically so.

So What’s The Answer?

You make the call, but from my perspective, unless you’re in the “1%”, investing in more informational wine menus may be the easier answer for you. Why not try it!

For more information on OnTrak Software and MenuTrak, in use by three of the Top Ten US Wine & Spirits Wholesale Distributors click this button:

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