The Importance of POS Marketing in Demand Management and Forecasting
Recently 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).
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:
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!
The 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.
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:
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:
Why You Need to Start Tracking, Measuring and Managing Your Point-of-Sale (POS) Marketing Programs
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:
The Changing Face of POS Marketing – Or At-Retail Marketing
One 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.
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 Note) These 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.
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?
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 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:
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.
So 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!
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Point-of-Sale (POS) Marketing - Focus on What’s Important and What Works to Achieve Your Business Goals
POS Marketing in the beverage industry means so much more than discounting and loyalty programs. It means managing, controlling and measuring the marketing at-retail process for ordering, producing and placing custom and permanent signs, beverage menus and beverage samples.
The decision to buy a beverage is made within seconds of entering a grocery aisle, or shortly after sitting down at a restaurant table. Only then is the effect of outstanding marketing at-retail clearly understood and appreciated.
If you are a supplier or distributor of beverages, for our purposes and our target prospects and customers, I urge you to write down at least one or two of the goals you have for your company. Looking over these goals of most beverage companies it is not surprising to see “growth” at or near the top of the list.
I’m going to assume growth means “more revenue”, and any elaboration on that theme would include the condition that top-line growth “will not come at the expense of the bottom line,” or would simply be stated as “improved revenue or profit.”
What POS Works?
In this blog we won’t come close to exhausting the subject of the importance of putting point-of-sale (POS) marketing materials, campaigns and promotions first.
Rather we’ll spend our time on suggestions that are focused on What POS Works. But don’t forget that POS initiatives are the key marketing measures you should be taking if your goals include “improved revenue and profit.”
The Consumer vs. The Shopper/Buyer
Much is written about the consumer. But it should be noted that the consumer is really only relevant to you if the shopper/buyer of your beverage is also the consumer. It’s not that the consumer isn’t important or relevant; it’s just that unless the consumer executes a shopper’s specific behavior, like choosing and purchasing your product from the retailer’s shelf, it doesn’t really affect your sales.
Without the purchase of your product, consumption just isn’t possible, obviously. This means that you must focus on the shoppers when they are at a place and time where and when they can and want to buy.
If you’re a beverage distributor, your reps probably have it fairly easy getting orders from retailers for the products you sell. In fact, if ordering products was all there was to “success” in selling beverages to Kroger’s or Piggly Wiggly, you could argue you don’t really need an order taker. On-line order taking could certainly be employed simply to place an order for let’s say 144 cases of beer.
Your rep’s real value lies elsewhere – certainly as the retailer is concerned and perhaps even more so for you, the distributor. Assume for a moment your rep “sold” 144 cases of one of your products to your customer, the retailer. Next, think what happens if the retailer doesn’t sell your product to his customers - The individual shoppers who walk the aisles looking to buy all kinds of products, including yours.
If your products don’t sell, the retailer may simply ask you if he can return the products purchased from you and receive a credit.
Now, here, we’ve reached a point where we could provide much more information regarding the mind or even the habits of the shopper. For the purpose of this blog we won’t go into that.
Three Effective POS Marketing Strategies
If you’ll accept the fact that you do need a particular message at the point of sale in order to increase sales, we will present three effective POS marketing strategies you can employ. We’ll also suggest a method for demonstrating what POS marketing materials really are most effective and provide the highest ROI.
1. Establish Brand Affiliation
If you work for a beverage alcohol distributor in marketing communications, custom POS design and development, or in the sales department, it is important that you think about your POS displays as the “always-on” promoters of the benefits and value of the product you are promoting. If the product is from a well-known and successful brand, it is also important to associate the product being promoted by your POS initiatives/materials with the Brand.
2. Focus on the Product - Focus on the Reason to Buy
Every POS sign or display should be produced to achieve the goal of selling more of the specific product being advertised. Typically POS is not designed with the goal of strengthening Brand Identity or a Brand’s Message, especially if the product being promoted is from a well-known and popular brand.
If your POS’s primary purpose is to announce a new or lower price in order to stimulate sales of an existing product; or grab market share from a competitor; or to introduce a new product from a well-known brand; it is important that your POS focuses on the product and price as simply as possible, and not so much the Brand.
If price is often used to sell your product, make sure the POS materials are as clear, clean-looking and simple as possible in identifying what is on sale, for what price and for how long. Product benefit messages are not important here, and they would actually distract from the selling point in this case - Low Price.
3. Bigger is Better - Less is More
Remember, when ordering POS for your retail customer, the product’s category and the number of products that you will be in competition with for the shopper’s attention. If the product’s category has many items, it has been demonstrated by our customers that one or a very small number of large-scale impressions (signs) increase demand more than many smaller impressions with a similar message. Shoppers see dozens, often hundreds of POS messages per trip to their favorite retailer – and many shoppers tune out all but the biggest impressions.
The OnTrak Solution
Without tracking, measuring, and visual verification to prove placement, the above three strategies will, generally speaking, work in some fashion.
But you won’t really know what worked best or even when. Therefore, to optimize the effectiveness and ROI of your POS marketing campaigns, you will need a system to help you track, measure and manage your POS initiatives from ordering, through production, placement and replacement.
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The Key to a Point-of-Sale (POS) Marketing Tracking System: Business Intelligence!
If you’re a wholesale distributor of beverages and an OnTrak application software user, I’m going to assume that by now you are either an expert or well on your way to becoming an expert in POS tracking.
This includes the accurate and efficient capturing your POS promotion orders from your sales reps in the trade, and approving, assigning and producing your orders once they have been accepted.
I’m also going to assume you’ve become quite adept at creating ad hoc reports requested by distribution sales management and your supplier’s sales managers.
Now, I’d like to take your expertise to the next level.
POS Business Intelligence – What Is It!
I’d like to offer you suggestions on increasing the value of your POS marketing campaigns by using the data stored in the OnTrak applications to create POS Business Intelligence
POS Business Intelligence can take the form of a report or a screen view that causes someone in your organization to take action to achieve a certain, hopefully beneficial, sales outcome. If you’re like most system’s users, much of the reporting and other information that comes from just about all application software is of the “good to know” variety. This isn’t meant to suggest that data that is used to provide confirmation of an event or fact, or produce invoices and other outputs, like picking tickets, purchase orders and shipping manifests, is without value.
Rather, it is meant to suggest that systems like MenuTrak, PermaTrak and SignTrak, can be used to generate information that can help you increase your productivity (sales or ROI) and decrease the potential negative (out-of-stock items) of your POS initiatives.
Beverage distributors, especially those who both create their own temporary POS and buy permanent POS promotional materials, face a unique challenge – and likewise have a unique opportunity. A challenge and opportunity that their suppliers may not typically see with respect to POS promotional campaigns.
POS Promotions Work
As you know, POS promotions work. If your beverage distribution organization creates and places signage – or other forms of POS including menus, tap-pulls, lit or moving permanent signs, etc. – history suggests sales of the items being promoted will most likely increase. And, if your POS informs shoppers of a sale price, increased sales are a virtual certainty.
Most beverage distributors manage thousands of SKU’s these days; and they also must constantly manage multiple POS promotions. Even though distributor route accounting systems (RAS) usually have some form of inventory management application, retailer stock-outs can occur and are more likely when items are promoted at-retail, using POS signage.
Due to the effectiveness of most POS materials, when items are promoted at-retail there is a chance to make extra profits or a chance to lose potential sales. The question is: What can you do to facilitate the former and eliminate the latter?
Tracking and Managing the Impact of POS Promotions
The answer to that question requires that you have a system in place that allows you to track, measure and manage your POS activities. POS promotions typically create special selling situations and the potential for out-of-stock situations. These stock-outs, or lost sales, can be mitigated by correlating historical POS promotional data available in OnTrak applications, with the sales data collected and stored in most route accounting systems’ data bases.
Distributors are uniquely positioned to know where, at individual customers, the POS materials have been placed, and by reviewing historical data will also know the likely impact of a certain type or style of POS and the impact of the message conveyed. Using the data from the POS management system correlated with sales data from the RAS system to forecast “demand during a promotional period,” stock-outs can be substantially reduced or eliminated, thus improving the quality of future promotion period forecasts.
One OnTrak customer determined that there was a measurable improvement in sales when they shifted their POS promotional approach from “several small” to “fewer large” signs. Now, when they plan for a POS campaign, they know “bigger is better and less is more” in terms of the impact on sales.
They use key OnTrak data elements correlated with data from their RAS to determine the required product order quantity, for each customer where there will be a POS promotion, based on historical information. In other words, they use OnTrak POS data correlated with sales data collected during the promotional period from their RAS system to create Business Intelligence. In their case, the actionable information has substantially reduced the number of stock-out’s their retail customers experience.
Naturally, the reduction of stock-outs increases both the retailer’s and the distributor’s sales and profits; and sales forecasting accuracy is improved for subsequent POS promotions. Of course the increased sales will be noticed by the distributor’s suppliers. Beyond the obvious benefits to all members in the supply chain, additional benefits accrue to distributors. Since suppliers are often co-opting promotions, or paying some or all of the distributor’s costs, the reporting capabilities provided by the OnTrak POS management system can assure them that they are receiving full value for their promotional spending.
By now, it should be clear that the “secret sauce” that will improve the productivity of your POS initiatives is the data that is used to create actionable information – reports using the distributor’s RAS sales data correlated with POS promotional data stored in every OnTrak application. Because distributors using virtually any RAS system and at least one OnTrak application can better forecast sales increases attributable to POS campaigns, out-of-stocks can be virtually eliminated and the most effective POS campaigns can be employed repeatedly and adjustments can be made as needed.
Improving Relationships with Retailers and Suppliers
Using OnTrak’s applications can increase the retailer’s confidence in the distributor’s sales forecast making it more likely that the distributor can increase the retailer’s order quantities to avoid stock-outs. Suppliers, too, will have increased confidence in the effectiveness of their distributor’s POS initiatives making it considerably easier to pay the distributor’s POS cost recovery claims.
Using a combination of distributors’ RAS sales data, correlated with their POS promotions data to create POS Business Intelligence – in the form of suggested retailer item order quantities – can help reduce stock-outs during promotional periods thus increasing both revenues and profits. Also, such actionable information can take much of the guesswork out of POS campaign planning.
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Point-of-Sale (POS) Marketing First – Every Other Marketing Type Second
Several of the blogs we’ve posted here have suggested that traditional marketing channels should be led by the marketing at-retail channel – also known as the shopper or point-of-sale (POS) marketing channel.
A growing body of evidence suggests that the most effective – and we believe the most efficient – marketing should begin with POS marketing. That means POS or shopper marketing spending should come first, followed by traditional media marketing spending.
Some ad agencies and marketing insiders long ago declared that POS Marketing should only be considered to be in-support of traditional media buys. Today that simply is no longer the case.
Media fragmentation alone – hundreds of TV channels and perhaps millions of web sites – has driven up the costs and increased the difficulty of targeting messages to a specific market. Today, non-traditional media, referring to mobile, social and perhaps most importantly POS marketing initiatives are the media types that have the greatest influence on shoppers becoming buyers.
Beverage Alcohol Industry
Beverage alcohol shoppers become buyers at-retail, not while watching TV or surfing the net or reading magazines and newspapers and certainly not when driving by billboards and other road signs. But, for some reason, marketers spend disproportionately higher amounts on traditional media advertising than on POS marketing. Considerably less could be spent on marketing if more of it was placed where the actual buying occurs. Further, the return on investment for POS marketing would likely be significantly higher.
I would go so far as to say that since the non-traditional media types – especially POS marketing programs – are today the most powerful drivers of sales available for beverage alcohol, POS should be the foundation upon which all other supportive (i.e., traditional) marketing should be built. The focus of a marketing program that has as its primary goal “increasing the top line” should begin at the place and time where shoppers make buying decisions. It should not – as is current practice – end there.
Now, I’d like to make what may seem perhaps a radical suggestion for beverage alcohol suppliers and distributors:
Think: Lead with POS Marketing – Everything Else Follows.
Unfortunately, POS is often referred to – by beverage alcohol marketers – as something they feel they must do because their competitors do it, rather than something they must do to gain a competitive advantage or to increase their top line. The reality is that POS marketing is actually the “X-factor” that converts a shopper into a buyer.
Over the last few years, “Lead with POS” or “POS First” actually has become the battle-cry for a growing number of at-retail marketing thought leaders, such as POPAI, the Path-to-Purchase Institute and Consumer Goods Technology (CGT), among numerous others. But, to be realistic, a POS first approach seems to have remained more in the realm of marketing theory than in actual marketing practice – despite the steady annual increases in spending on POS marketing materials and promotions.
Current research still demonstrates that beverage marketers continue to invest in POS marketing often as an afterthought. A necessary evil it is called by some, or as an add-on to more traditional media spending. For some reason, marketing executives and other practitioners apparently need more convincing to adequately fund and support the POS initiatives that actually help guide the shopper’s steps to the decision to purchase a specific brand or product.
Other than POS marketing, only word-of-mouth is even close in its ability to almost literally cause a shopper to make a buying decision. POS marketing, when done correctly, is always within sight at-retail – the place beverage shoppers go to research and decide to buy your product or someone else’s.
In support of this, a combined 2012 POPAI Study determined 76% of purchase decisions are made at-retail. Even those who discount this percentage agree that marketing at-retail is not something you want as an afterthought, rather POS marketing is something you need in order to win at retail (Note 1).
Grocery Manufacturer’s Association Study
The truth is that “POS first, traditional media last” should be the standard beverage alcohol supplier’s or distributor’s marketing approach. According to Grocery Manufacturer’s Association (GMA) Studies conducted by major accounting and consulting firms over the past few years, even most shoppers believe POS is one of the most important factors guiding their “conversion” from shopper to buyer. Indeed, some of our brand-name beverage alcohol distribution customers believe without POS marketing, their primary brand’s market-share would decline.
Our current viewpoint is that merely leading with POS may not be sufficient for on-going competitive advantage and retail sales success. We now believe that to be successful, beverage suppliers and distributors must think beyond POS first campaigns and start to think almost exclusively about POS marketing as a complete foundation for the next generation’s shopper journey.
Here’s what this means: Today, Shopper or POS marketing, regardless of the budget available to those who conceive and create the end product, is either left unmeasured or is measured as part of the overall marketing budget’s dollars for eyeballs metric touted by advertising agencies.
POS marketing is rarely held up to any scrutiny or accountability, and its ROI is rarely measured. In most beverage alcohol distributors there is rarely much evidence that POS marketing is a core business practice, despite the belief that if POS marketing were to cease, sales would suffer. There needs to be both recognition of and action taken to raise the level of importance of shopper marketing within the organization.
Often, the sign shop manager working for a beverage alcohol distributor is provided virtually no marketing education and often has the job because of a skill or interest level in a graphical production software package. As a result, POS marketing strategies for the most part don’t exist. What does exist is a very expensive production facility staffed by individuals who are either not at all focused or only focused at the periphery on the point-of-connection between the brand or product and the shopper.
Our suggestion: Empower (educate, train, involve in marketing management and sales) your POS marketing materials developers broadly in every aspect of the point-of-connection between your products and the “fourth-tier” – the shopper.
Your beverage alcohol POS marketing materials developers need to collaborate with marketing and sales management and with their company’s suppliers thus helping the sales organization with capturing marketing share and increasing the top-line. Clearly, just investing in POS promotional materials as a defense against your competition is not enough. Today POS or Shopper Marketing is a key driver converting shoppers into buyers.
Adopting POS marketing technology that tracks, measures and manages POS materials can be very beneficial, ensuring the move to POS first and enabling the adoption of Shopper Marketing as the foundation upon which you build all of your marketing initiatives (Note 2). Doing so, too, will create and maintain an advantage over your competitors who have not yet become aware of the benefits that accompany a POS first strategy.
We live in the shopper’s world, a POS world – we urge you to be guided accordingly.
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Note 1: “The Shopper Marketing Revolution,” Toby Desforges, Mike Anthony, RTC Publishing, Copyright ©2013
Note 2: OnTrak offers point-of-sale (POS) marketing technology products that can be accessed if users have a connected PC, Apple or Android Internet browser, a user-id, password and a valid subscription. Our products help beverage alcohol distributors track, measure, manage and verify the ordering, fabrication, and placement of POS marketing materials – such as signs and displays. Additionally we collect large amounts of data that will permit our customers to correlate POS marketing initiatives (and costs) to product sales to help determine what POS is the most effective and yields the highest ROI. More information about our products is available right here on this very website.