POS Marketing Reality - Is It Your Perception or the Actual Marketing Data?
The subject of this blog is to focus on the importance of POS (Point-of-Sale) marketing data and the analytical tools that allow you to track and measure your POS Marketing investment based on real data, and not someone’s perception of what’s going on at-retail.
A Trip Down Memory Lane
Let’s take a trip down memory lane – Mostly focusing on the days before POS marketing data and supporting marketing technology was generally available.
There are several brand name products which may call up certain emotions – Mostly nostalgia if you are of a particular age group, and the brand had a clear market dominance.
If the brand was very well-known, you may still have the ability to recognize its name or slogan.
Let’s try an experiment using some recognizable phrases: (see Note 1 for answers)
“When you’re out of ________ you’re out of beer!” - Fill in the blank.
“A little dab’ll do ya.” - Refers to what brand or product name?
“For all you do this ______ for you.” - Fill in the blank.
“I don’t always drink beer, but when I do, I prefer ___ ______.” - Fill in the blanks.
“They’re GRRRRRRREAT!” - Refers to what brand or product name?
“________ . There is no substitute.” - Fill in the blank.
“_ _ _ _ _ _ _ . . . ________ makes the very best . . . _________.” - Fill in the blanks.
It has been said that a “brand” is perceived based on about 5% to 10% memory, and 90% to 95% advertising, promotion, and marketing.
Little of the perception of a brand, at the points-in-time suggested by the above phrases, was measured. It’s only in the last few years that real marketing data has been collected about POS Marketing. And only very recently has that captured data been analyzed in order to determine the return-on-investment of promotional events.
Many brand names, and even more product names, come and go only to be replaced with new names. I wonder if the brand names of Plymouth and Oldsmobile or Schlitz are widely remembered, or today’s brands will suffer the same fate. And does it matter?
I'm bringing the subject of “brand recognition” because it has become increasingly difficult for Consumer Package Goods, including beverage suppliers, to bring new products to market via traditional electronic and print media. The clutter of TV channels, print outlets, and the Internet has made it all but impossible to gain sufficient exposure to introduce, build and sustain brand recognition and perception - And “perception is reality.”
You Can’t Manage What You Don’t Measure!
Here are some obvious questions at this point:
“What is a viable – and affordable – alternative to the spending on TV and Internet content?”
“What type of marketing approach can we take that can actually track and measure?”
“How can we collect the data to allow us to track and then analyze the effectiveness (ROI) and costs of our marketing initiatives?”
Lucky for you, there are analytical tools available that will help you to correlate you POS Marketing investment to any incremental sales results. Once again, why is this of such importance?
Here’s why. According to a brand new KPMG International survey as reported by Consumer Goods Technology, released July 28, 2014 (see Note 2):
“More than any previous year, the focus of executive attention has shifted from economic uncertainty to data, technology and the supply chain.” Additionally, “56% of consumer goods and retail business leaders cited data analytics as being important to their firm’s strategy, making it the highest-ranked strategic area in the survey.” Finally, “The survey results reveal that improving capabilities in the area of data analytics is the number one strategic priority for executives in the consumer space in 2014," comments Willy Kruh, global chair, Consumer Markets KPMG International.
From our perspective, the fact that analytics is the “number one” priority for executives in the CPG space is exciting news. The reality, however, is that there are also some studies that suggest these same executives lament the lack of tools to actually accomplish the tracking, measuring and correlation of marketing initiatives to sales.
At the risk of being a broken record:
OnTrak has web-based marketing technology available right now that is specifically designed and developed to provide CPG and beverage distribution companies the following capabilities:
Configuring and ordering POS marketing materials
Tracking these orders through production and placement, with visual verification of the placement
Providing the analysis of what POS materials correlate to the largest sales increases
Determining the ROI achieved based on the costs of a particular POS campaign
If you are a CPG or beverage executive looking for these capabilities, then take a look at OnTrak Software.
Our name says it all – Our marketing technology will keep you OnTrak.
To learn more about OnTrak and its Point-of-Sale Marketing Management solutions, please click the following button.
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Note 1: 1) Schlitz; 2) Brylcreem; 3) Bud’s; 4) Dos Equis; 5) Kellogg’s Frosted Flakes; 6) Porsche; 7) N E S T L E S, Nestles, chocolate
Note 2: “Global Top of Mind Survey” - KPMG International; the survey was conducted by Oxford Economics on behalf of KPMG and The Consumer Goods Forum during April 2014.
Getting Started: Tracking and Measuring Your POS Marketing Activities
“That was then, this is now.”
I'll bet you've heard or read this phrase forever!
It's usually associated with economic, social and political opinion and fact. Elected officials, managers, educators and historians rely on this 6-word phrase to explain changes in their approaches to issues and problems of all sorts.
What this phrase suggests is that we now have new information upon which to base our actions or conclusions regarding any number of subjects - Something like “According to US Government data as of 2012 . . . .”
We certainly could conclude that 2012 data is new enough for us to consider it as sound – or at least “sound enough” for us to base our behavior upon. We’ll see.
For more than a decade, “the” data point used to describe why at-retail or POS marketing was so valuable has been:
The POPAI Perspective
The 70% number came from POPAI and was based on their 1995 study of shopper behavior. That was then, this is now.
In 2012, POPAI released a new “Shopper to Buyer” study, and the 70% number was updated to 76% based on new data. Considering the length of time between the original and the 2012 study, a 6% increase in at-retail decision making was not all that surprising. But, in 2014, a follow-on POPAI study (2014 Mass Merchant Shopper Engagement) was released showing the number had again grown by 6% taking the at-retail conversion from shopper to buyer decision number to 82%.
You may or may not be inclined to agree with POPAI’s “82% conclusion” – but their study methodology, sample size and academic rigor is impressive. What really got my attention was that the 2012 and 2014 studies show just how quickly the CPG retail shopper has changed. The studies show how much today’s retail shoppers rely on point-of-sale materials to help them make buying decisions. Part of the reason for this, the 2014 study noted, is that shoppers at mass merchant retail stores spend very little time pre-planning their purchases.
“The Mass Merchant shopper is more often reminded by something in-store when purchasing an impulse non-grocery product.
This likely is a result from the lower rates of overall planning and calls out the need for in store [POS] signage and displays to remind the mass shopper what he/she needs.”
Calculating the ROI of POS Marketing
The real question is what is the return on investment (ROI) for your at-retail signage and displays? To determine this, you’ll need to correlate sales changes to the cost of placed POS signs and other materials to evaluate their effectiveness. Once you have the cost of the POS materials and the change in sales data in hand, you can determine if the ROI calculated was greater than 1:1.
There are several formulas that you may elect to determine the ROI of your at-retail marketing. Often the simplest formula is the best in that the simple formula will typically provide you with the answer to two basic – yet very important – questions:
Is my POS marketing campaign (sign or display) working to convert shoppers into buyers?
Is the cost of my POS marketing campaign justified (is there a positive ROI)?
One of the most basic formulas you can use is:
If needed, you can modify this formula to measure the ROI of the incremental sales attributed to a particular marketing at-retail initiative:
The components for calculating your POS marketing ROI can change for different customers and different products; but with POS ROI calculations and measurements, you can focus on at-retail marketing programs that deliver the greatest sales increases and the best ROI.
Finally, as noted in basic question #2 above, ROI will help you justify marketing investments. Since marketing is an investment to increase revenue, you can, by focusing on ROI, help your company grow.
What About Beverage Alcohol Companies?
Based on our experience with hundreds of our customers and prospects, if you’re a beverage alcohol supplier or distributor, there is a reasonable chance that you don’t capture the costs of your POS marketing investments and that you don’t measure the ROI.
There is also a good chance that you have an overall sense that POS marketing works, but you’re not sure what campaigns really are most effective or not at all effective.
The fact that you are here at our website, reading our blog, suggests that you know there’s room for improvement and benefit if you begin to track and measure your POS initiatives. You’ve arrived at a “That was then, this is now” moment.
A Good Place to Start
Assuming you currently do not track and measure any of your POS marketing programs, a good place to start is to collect the data required for you to calculate the ROI on your POS marketing investments. You can then review the information over time to make better POS marketing decisions.
Then as you get more data and become even more comfortable with the measurement process, you’ll find your POS marketing campaigns will continue to improve, your ROI will improve, and your at-retail marketing program costs will be reined in, made more efficient or both.
When one of your customers or reps requests what seems to be an expensive sign or display, you’ll be able to predict the merits of spending to create the marketing collateral based on data, not “gut-feel.”
I urge you to begin using POS marketing technology to track, measure and manage one of your biggest expense categories: POS marketing programs. Perhaps you’ll change your thinking once you adopt a system that facilitates capturing, examining and analyzing your POS data.
To learn more about OnTrak's software to help you track, measure and manage your investment in POS marketing and promotional events, please click this button:
Point-of-Sale Marketing: Promotion or Advertising?
I read many trade publication articles, text books and marketing books about the subjects of at-retail and point-of-sale marketing, promotion and advertising; so, this blog will be a blend of both borrowed and original thought based on nearly 10 years of my company providing point-of-sale marketing technology solutions to the beverage industry.
My current read is the excellent, but somewhat dry, book from POPAI, called “Marketing at-Retail: Understanding, Influencing and Winning Today’s Shopper.” I encourage you to check out the POPAI or Amazon websites to learn more.
My background includes a graduate course of study at Miami University’s Farmer School of Business that included marketing, advertising and market research. Little did I know then that I would be neck deep in a software company that produces and sells marketing technology applications designed to track, measure and manage at-retail marketing and promotional initiatives for consumer packaged goods (CPGs) companies.
My professors were attempting to get the idea across that “Marketing” is made up of advertising and promotion; and, that these two different forms of marketing are not intended to produce the same results.
Advertising has the primary goal of building brand loyalty and of generating long-term sales. Advertising is a “steady-as-she-goes” form of campaigning and may, or may not, have the effect of converting a shopper into a buyer – today. Advertising builds brands, just not necessarily today’s sales.
Promotion, on the other hand, would seem to be intended to have little, if any, impact in the area of building brand loyalty. In fact, promotion is designed to generate brand dis-loyalty, by encouraging brand-switching and stimulating short-term sales.
Promotion is to Advertising as a flashbulb is to the eternal flame.
But not so fast!
The Marketing of CPGs
I would argue that while the preceding characterization isn’t exactly false, it misses the point of where we are today in the marketing of CPGs.
The notion that brand loyalty is something to strive for will get no push-back from me. Yet, the notion that spending a fortune on traditional advertising just to “build a brand” – in today’s CPG marketplace – is something I would irreverently respond to by saying, “What are you thinking?”
Remember please, we’re examining the marketing of CPGs in this blog. CPGs, long the staple of prime-time TV programs, soap operas, news, and sports, are products that have proliferated so rapidly in the last few decades. It’s hard to imagine repeatedly spending corporate fortunes to create or build a brand – particularly if brand building is to be accomplished at the expense of sales, short-term or long-term. Investors and other stakeholders hate to wait for sales while countless marketing sums are spent simply to gain mind-share in potential consumers’ minds.
CPG Marketing, both advertising and promotion, must generate sales: Now. Certainly sales need to be generated over the long-term; but, more importantly, sales need to be “promoted” in the short-term. The life-span of so many CPGs today will be cut short if the sales don’t happen in the short-term.
Converting Shoppers Into Buyers
Here is where Marketing at-Retail, shopper marketing or Point-of-Sale (POS) Marketing comes into play today. POS is both advertising and promotion displayed at the time and place where a shopper can be converted to a buyer. The marketing of CPGs should be designed to persuade your potential customer to buy your products today, not just become “aware” of them for some future date purchase.
Why POS Marketing’s power to influence sales is growing:
CPG supplier executives are requiring their marketing spending to have some accountability, and some measurable ROI
CPG companies live in this quarter – not next quarter or next year
Shoppers respond to POS initiatives: Shoppers and consumers increasingly seek-out brand and product information primarily where and when they are shopping
CPG SKU explosion means there is little chance for retail shoppers to have repeatedly seen TV ads
The Internet competes with and sucks time away from traditional media viewing, also reducing the chance for consumers to repeatedly see advertisements
Today’s POS Marketing goals:
Tracking and Measuring Results
One of the most important points presented above is the contrast between traditional advertising and sales promotion as it relates to tracking and measuring results of either.
Advertising has always relied on the “how many eyeballs saw the ad” approach, which due to the time-lag between ad broadcast and shopping event make an ad’s influence difficult to determine.
Promotion effectiveness at the point-of-sale is relatively easy to measure. Also, promotion can be changed and moved practically in real-time, further enabling marketers to determine which promotional type and message yield the highest ROI (as measured by incremental sales).
One other effect POS marketing can offer is the ability to disrupt competitor’s efforts simply by getting the POS to the retailer’s aisle first. This is especially true when one of the goals of a given POS campaign is to grow market share. Good examples include carbonated soft drinks and big-name beers where there is both very little brand loyalty and significant price sensitivity.
As manufacturers, distributors and retailers alike continue to shift their focus to short-term results POS’s power to help brands win at retail is likely to remain on an upward course. The fact that there are now proven powerful software tools that can be deployed to track the effectiveness and efficiency of these marketing programs is also a compelling reason to imagine even further reliance upon at-retail marketing – at least for those who want to increase sales today.
For more information on OnTrak’s suite of marketing technology applications specifically designed to track, measure and manage the impact of today’s at-retail advertising and promotions, please click the following button.
POS Waste Reduction – What’s it Worth to You?
In this blog, I’ll give you some guidelines to help determine if POS Tracking tools, like those from OnTrak, can be justified by the elimination of POS waste. For purposes of this blog, POS means signage, which is placed in the retail market to promote a particular beverage brand.
In order to determine the value of any software that is designed to reduce the costs of your Point-of-Sale (POS) marketing materials, and speed your POS to market, it is important to know just how much wasted POS actually costs.
A Recent Example
Recently, we demonstrated one of our products, SignTrak, to an enthusiastic audience at a large beverage alcohol distributor with over 100 sales reps, who also are responsible for merchandising.
Like most of our prospective customers, and all of our current customers, the first problem this distributor was attempting to solve with our software was his out-of-control POS costs. As requests for signage from retailers have increased, so too have the costs of ordering, producing and installing that POS. But these costs were increasing at a rate disproportionate to the actual increase in the demand for the signs themselves.
For some time, the POS costs for most beverage alcohol distributors have increased due to the increase in the costs of the consumables used to create the POS signs. Paper and ink costs continue to escalate; and with the increased demand for signage, additional infrastructure and labor costs swell too. Indeed it is not unusual for distributors to rank POS – and all the associated costs – as the number two expense following payroll.
It is no wonder, then, that OnTrak’s prospective customers are looking for solutions that will “Stop the bleeding” of cash being spent on what they perceive to be “breathtakingly expensive” POS marketing materials.
Calculating the ROI of POS Tracking Software
The question then becomes, “How do we determine the ROI that can be realized by using a POS tracking and management tool?”
The following will provide you with an understanding of how our customers use OnTrak to calculate and reduce the cash burn associated with the ordering, production and placement of POS signage, and other POS marketing materials.
Remember, there are competitive advantages to using marketing technology to increase both sales results and supplier marketing-recovery dollars; but we’re not dealing with those aspects of deploying marketing technology tools in this blog.
Let's Get Started!
How Much Does a Re-work Cost?
There are three things to consider:
1. Production Costs
Let’s establish some base-line costs for the production of a non-laminated 3’x5’ paper sign to be placed at your retail customer’s location. Sign costs for consumables currently stand at about $1.60 per square foot. This cost includes infrastructure costs, such as your printers, graphics software, office space, etc.
This translates to a base cost for this sign, as follows:
(3 x 5) x 1.60 = $24.00 (production)
2. Labor Costs
Next, we need to determine the cost of the labor required for the production of the signage. Fully burdened, the cost of the graphics or sign shop manager is at least $25 per hour – often more, based on the local labor market. Assuming it takes about 20 minutes total time to: Receive the sign order, create the sign using a commercially available graphics package, load and unload the printer, and finally notify the merchandiser responsible for the installation of the sign that it can be picked up, the labor costs will be $8.33. Your sign’s base cost is now:
$24.00 (production) + $8.33 (labor) = $32.33
3. Ordering and Processing Costs
To that amount – $32.33 – the costs associated with ordering the sign and processing the request need to be accounted for. Fully burdened, sales reps typically cost at least $36 per hour, often much more. Distributors tell us that the amount of time required to order a sign without an automated system is 3 to 5 minutes with an additional 3 to 5 minutes spent on the phone with sign shop personnel to explain what the sign is supposed to look like and subsequently to inquire about the sign’s availability to be picked up. If we simply assume a total of only 5 minutes for these two communication activities combined, we will increase our costs by about an additional $3.00. Our single 3’ x 5’ sign’s cost in this example, not including any time or cost attributed to picking the sign up and delivering it, is now:
$32.33 (production and labor) + $3.00 (order and process) = $35.33
Our prospective customer indicated they would agree that $35.00 is their average cost per sign.
So What is the Total Cost for Re-works?
To which we reply: “How many re-works do you have per month?” (See Note 1)
In this case the graphics and POS production manager indicated that with 100 sales reps and 10 sales-team leaders, they estimated “About one re-worked sign, per rep, per month.” In other words, 100 re-works per month. At an average cost of $35 per sign, re-worked sign costs were $3,500 per month, or $42,000 per year.
The sales manager, in attendance at this meeting, added, “The cost is actually greater, because we had to have our rep place the first order and have our sign shop produce the sign incorrectly the first time – usually finding out the sign was wrong when we delivered it to our customer.” He added, “Then we have to re-order and produce the sign a second time which usually means it doesn’t get to the trade until a day or two after we had planned.”
The discussion continued and the sales-manager pointed out that “Price sells most of our products,” and that “Price is communicated via signage placed near the products.” This suggests that getting the sign to the trade two-days later than he planned would cut into this week’s market share, assuming the competition got their signs up two-days earlier.
So How Much Does SignTrak Cost?
At this point our prospective customer asks: “How much will SignTrak cost us?”
The list price, per user, per month for SignTrak for a customer with 100 users is $12.00; or $1,200 per month; or $14,400 per year. Our customers tell us the re-work reduction after deploying SignTrak is 75% to 95%. Assuming the lower number - 75% - this would, in the above example, be a cost reduction of $31,500 per year. This means that for every $1.00 spent on SignTrak, the cost reduction of re-works alone would be a return of $2.19 – Over a 2 to 1 ROI.
Isn’t this a no-brainer? Act Now!
Please take the time to put pen to paper and take a serious look at the ROI your company could enjoy by deploying OnTrak’s POS marketing technology solutions.
For more information on OnTrak’s suite of marketing technology please click the following button:
A live, OnTrak demonstration will show you how we accomplish these saving. The demo typically requires less than an hour of your time.
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Note 1: A re-work regardless of the reason for it, is any sign request that has to be produced, scrapped and re-produced due to either an error in ordering/configuration or an error made during production. Often a sign is produced according to the order, is picked up and delivered, and then either the rep or the retail customer finds an error in the graphic or the content, or both.
Think You’re Too Small to Advertise? Are You Kidding?
Purpose of This Blog
This blog is intended to focus somewhat narrowly on the marketing of “small” beverage alcohol brands and products such as craft beers, small yield wineries and “limited edition” liquors.
Nevertheless, many of the points made here are applicable to the broader beverage alcohol categories, perhaps even including some of the mainstream, household name brands and products available at your favorite off or on premise retailer.
Our Customers Rely On Point-of-Sale (POS) Marketing
Our customers, who supply or distribute malt-beverages and wine and spirits products, rely first on POS marketing, second on social media and some mobile, and third on traditional word-of-mouth-marketing (WOMM) to promote their brands. And this is especially true when it comes to marketing craft beers, “small” wines and limited supply liquors. In most cases the reasons for distributor’s reliance upon POS marketing for these products is that their suppliers simply don’t have the millions of dollars required to advertise on traditional electronic media outlets, like TV, in any substantial way.
In addition, we have heard our distributor customers frequently tell us that "Nothing will be featured by our retail customers that has not been sampled." Sampling a new craft beer is something TV isn’t good at either, as we all have figured out. Now along comes a recent web-article stating that “55% of Craft Beer is sold on premise.”
To read additional findings pertaining to Craft Beers click this link: Brewbound: Technomic Research on Craft Beers
Sampling comments from our customers and the many articles to be found in trade publications, and on-line blogs on the subject of brand/product introductions and brand building, suggest that:
“At the point-of-sale is both the best place and offers the highest ROI of all of the paid marketing at-retail initiatives and programs.”
How Much Money Do You Have To Advertise?
Excluding Sam Adam's ability to spend $45M on traditional media advertising this year, it is accurate to observe that most craft suppliers simply don't have the multiple-millions of TV ad dollars required to even make a small, superficial impression upon their target market. They can’t afford to make an impression – and this has nothing to do with the inherent quality of their products. Remember, even Sam Adams had to start small.
For those “too small to advertise” suppliers, POS marketing offers a fighting chance to educate, influence and persuade today's shoppers to become buyers.
B2B sampling activities are, for many suppliers (both breweries and distributors), the least expensive way to get a new product "on the menu" so to speak. B2C tastings likewise, can be conducted at-retail and can often build grass-roots WOMM that can yield impressive spot sales.
Now that your local grocer not only has Friday night wine tastings, but also beer pairings, it is possible to get maximum local exposure courtesy of the craft beer distributor's sales reps.
Other reasons that traditional (TV) advertising may not make sense even if the craft or small batch beverage supplier has a few spare millions:
Cable “Cord Cutting” is up by 44% since 2010 to 7.6 million homes who no longer pay to subscribe to TV, rather electing to pay for Netflix or Hulu – and Netflix’s "Orange is the New Black," airs commercial-free, for example
Gaming consoles are getting into the original programming "game". Xbox One started "broadcasting" this year. Is advertising an option here? Not yet.
As if we don't have enough channels: Amazon and HBO are working together so that Amazon Prime members can access HBO original programming. Yahoo! is also joining the growing list of non-broadcast, non-cable, non-satellite providers with its own original programming.
What’s the answer?
In the face of this diminishing power of traditional advertising, POS Marketing is gaining ground. One key reason is that there are now tools available that traditional electronic media has never had, and quite likely never will. With new marketing technologies, supplier and distributors have the ability to:
Directly correlate their POS marketing investment to incremental sales.
Traditional ads will offer advertisers the promise of so many "eyeballs" (often called CPM) and there is the concept that the more eyeballs on your ad there are, the greater your sales will be. But the correlation between the eyeballs of that target market and subsequent sales continues to weaken due both to audience fragmentation and especially the massive number of channel options.
The "good-old-days" of consolidated audiences and only 3 or 4 channels on TV are gone. About the only place suppliers can enjoy some certainty of a consolidated "audience" is at the point of shopping; or as Anheuser-Busch/InBev calls it, “the POC” – the point-of-connection between the brand/product and the consumer.
You may also argue that you can convert a shopper to a buyer on-line, and that too is accurate to a degree. But the truth is there is no better place to connect with a potential buyer, at the time of their decision (to buy), than in the store; and of course in the specific aisle, where your product is available for purchase. You see, shoppers often like the ability to instantly buy and take home, rather than wait even one day for their purchases to arrive.
For information about OnTrak’s marketing technology tools that will help you track, measure and manage your investments in POS marketing, and correlate that investment to sales results, please click this button:
How Point-of-Sale (POS) Marketing Technology Will Improve Your Company’s Productivity
The “Great Recession” and Corporate Productivity
Watching the business news networks, reading Forbes, Fortune and The Wall Street Journal and talking with our customers and prospects, it certainly appears the US economy is today back to “pre-Great Recession” levels.
In most cases, business reporting suggests companies seem to be at least as profitable as they once were, and in many cases, companies are even more profitable because of the belt-tightening exercises they initiated during the “Great Recession” (GR).
It’s difficult for me to believe that we came out of the recession, technically, in June, 2009; riding on a newfound wave of rapidly rising productivity.
The reason for this productivity, of course, was that companies and their remaining employees were making do and doing more with less. Productivity gains by the end of 2009 were up almost 6% according to government reports.
A sign on the wall of one of our customer’s break rooms goes a long way to explaining why, and how such productivity was achieved:
“Use It Up - Wear It Out
Make It Do - Or Do Without”
Where Are We Now!
Now, five-years later, employees – less likely to be living in fear of being laid-off – are starting to move on to other opportunities and their former employers are finding it increasingly difficult to find replacements. The result of the country’s improved economy and many companies’ improved productivity is, oddly, declining productivity.
Annual productivity has now fallen by almost 5%, now averaging a meager 1% or less, according to government statistics. Although hopefully partially weather related, productivity in Q1 2014 fell below productivity in Q4 2013 – Not a good sign.
The impact of falling productivity is possibly due to the overall economic contraction, including reduced spending on consumer goods, construction, and durable goods, as well as the increased possibility of another recession, based on the official definition*.
But, before we resign ourselves to that fate, perhaps we should ask, what is the reason for this falling productivity – beyond an abnormally harsh winter?
Reasons for Falling Productivity
Various studies mention a primary reason for falling productivity is that businesses have been under-investing in themselves. Capital spending on the “infrastructures of productivity”, such as software, has declined sharply since the onset of the GR. Initially, the reduction of capital spending (belt-tightening) by companies during the early days of the financial collapse improved their financial positions. Lay-offs and pay freezes, justified by the GR, have depressed worker compensation to a multi-decade low, further improving these companies’ bottom lines.
Today, companies are cash rich – at least according to many public companies’ annual reports – and profits are strong, in many cases historically strong. The Dow recently closed above 17,000 for the first time ever and we’ve been enjoying employment growth of some 200,000+ jobs per month for most of 2014.
Now Is the Time to Invest in Productivity Tools
Now is the time to invest in new equipment, software and facilities. It’s time to put the latest and greatest productivity tools in the hands of employees. It’s time to invest in the tools that will provide you and your business interests with a competitive advantage. It’s time to increase both your top and bottom lines. In short, it’s time to grow.
Although companies, including some of our customers and many of our prospects, did tighten their belts, and their purse-strings, choosing not to invest in software to reduce the cost of their point-of-sales marketing initiatives – That time has passed.
For consumer goods suppliers and distributors, especially in the beverage market, now is the time to invest in point-of-sale marketing technology that will not only track and reduce the costs associated with POS marketing, but technology that will also measure the outcomes of your point-of-sale promotions. Armed with this information you can now make marketing decisions that will most likely have the highest return on return-on-investment.
And this investment in POS marketing technology will enable you to track, measure and manage your at-retail marketing programs, and lay the foundation for your company’s higher sales productivity for many years to come.
If you’d like to know more about our POS marketing technology please click the following button:
*The technical indicator of a recession is, “Two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)”.
Challenging the Marketing Technology 'Status Quo'
POS Marketing - The Status Quo
The definition of an axiom is: A statement or idea that people accept as self-evidently true – Something that is so evident that it is accepted as truth.
At OnTrak, the axiom we hear most frequently from prospects that we approach about our point-of-sale (POS) tracking software is the phrase “status quo” – Or as they say, “We don’t need your software because we’re happy with how we’re doing it today.”
The truth is that without some marketing technology to track, measure and manage their POS, they may not know how they’re doing.
We truly believe that if your company isn’t moving forward with managing your POS, it’s actually going backwards. Not simply staying in the same place.
2014 has been the most successful year in our company’s history, dating back to 2006. As we move forward we can’t be satisfied with the status quo. As a software company, offering a set of POS tracking solutions to the market, we want to keep doing everything we can to challenge the status quo and continue to improve the capabilities of our products for our customers.
As I was thinking about this week’s blog, it occurred to me that we've become much more than a company offering solutions to simplify the ordering of POS marketing materials. Yes, our products have the capability for configuring and ordering POS marketing materials; but there’s so much more to our products.
We’ve transformed into a company that provides tools for the tracking, measuring and managing of POS marketing materials. These tools are designed for use by beverage companies to stimulate sales. Our customers have helped us enhance current products and create new products, and we’ve proven time-and-again that “You can’t manage what you don’t track and measure.”
In many ways, change is an OnTrak hallmark.
We’ve become a leader in producing and implementing at-Retail Marketing Technology solutions for beverage companies of all sizes and stripes.
We started with a medium-sized AB wholesale distributor in Northern Kentucky, and now have dozens of customers – including 10 of the Top 25 beer distributors and three of the Top 10 wine and spirits wholesalers in the US. Our software products are used by thousands of beverage sales, marketing and merchandising personnel; and our customers are producing and using more effective POS marketing materials to sell billions of dollars’ worth of beverage products, in tens of thousands of retail outlets all across the country.
One of the key reasons we’ve recently added dozens of new customers and enjoy customer renewals of over 95% is that we listen to our customer comments and suggestions for product features and functions. Then we innovate to demonstrate to our customers, prospects, and even ourselves how we are committed to keep the status quo firmly in our rearview mirror.
Seeking Change and Avoiding the Status Quo
Now is the time for all of us to recognize and challenge ourselves to not only accept change but to seek change vigorously.
You, as a supplier or distributor of beverages or other consumer goods, are aware of the remarkable changes in point-of-sale and shopper marketing that have taken place and that continue to unfold – principally in the wake of the Great Recession.
Today suppliers and distributors are required to adopt new marketing technologies and effectively and efficiently market brands and products to the current crop of retail shoppers – many of whom see little traditional media advertising, yet seek-out point-of-sale or shopper marketing materials.
Here it bears repeating:
If you haven’t adopted marketing technologies to help you track and measure your retail marketing initiatives and programs, it’s impossible to manage them.
What was once “acceptable” point-of-sale marketing – placing temporary and permanent signs, displays, etc. without knowing what works and what doesn’t – now serve as little more than defensive marketing tactics. Your in-house graphics and printing departments need to be managed by leaders in shopper marketing, highly curious types of individuals unwilling to be satisfied with the status quo.
It is now necessary to go on the marketing offensive, providing retail marketing materials that are:
Tracked - From order, to put up, to take down,
Measured - To find out what works best to provide positive sales impact and determine ROI, and
Visually verified - To find out what materials are actually placed at the point-of-sale or for compliance purposes.
We do all this in order to help you establish, retain or gain market share. Going on the retail marketing offensive at its core requires marketing technology – software that enables you to manage your marketing and sales goals at the point-of-sale.
It is remarkable to note not only that we have come so far, but also we have a good idea of how far we have yet to go. There remain thousands of companies that rely on point-of-sale marketing who are not utilizing any form of marketing technology as a competitive weapon. This, inevitably, will change.
I’ll end as I began, “If your company isn’t moving forward it’s actually going backwards. . . .” You simply cannot keep going for long unless you keep innovating – especially with respect to your marketing technology.
To learn more about how OnTrak can help you write that next chapter, click the following button:
How Measuring At the Point-of-Sale Helps Convert Shoppers to Buyers
Winning with Point-of-Sale (POS) Marketing
Price is Important
For the consumer goods that most shoppers would consider interchangeable, price is important information, and perhaps the most important information for shoppers to make the decision to buy.
For products like Diet Coke and Diet Pepsi, or competing name-brand light beers, for example, many shoppers will almost always buy the one that is priced lower.
If the “lowest-priced diet cola of the week” changes from week to week (Coke to Pepsi and then from Pepsi to Coke), it should come as no surprise that the ‘on-sale’ diet cola will almost always enjoy a sales increase.
The Purpose of POS Marketing
The purpose of the POS marketing materials for these largely interchangeable, on-sale, diet colas and light beers is to inform the shopper of the promotional price.
Little, if anything, can be gained by attempting to persuade shoppers to buy based on the merits of the brand-name itself, or of the specific diet cola or light beer. The market knows Coke; and the market knows Pepsi. So if Diet Coke is a $1.50 cheaper per 12-pack than Diet Pepsi, that fact alone may provide all of the information and persuasion many shoppers need to make the decision to buy
There are a decreasing number of brand loyalists that will typically buy “their brand” even if it costs more. For them, $1.50 off of a 12-pack is an insufficient pricing incentive to change their minds.
Measuring the Impact of POS
It would be dishonest and inaccurate, at this point, to suggest that suppliers, distributors or retailers should give up on POS marketing and post-campaign measurement for high-volume, price-driven items, like these diet colas and light beers.
Measuring the impact of POS, where the message is price first and product qualities second, is unlikely to be as effective as the measurement of the impact of POS that is working to persuade shoppers to become buyers by informing them of the features and benefits of the product first, and price second.
But don’t underestimate the power of POS to increase sales even if its prime reason is to present a low price message.
How About Beverage Alcohol?
So let’s talk about the behavior of suppliers and especially distributors of beverage alcohol (BA) - One of the largest categories within the over $2 trillion US consumer goods universe.
It does appear that this category, over the course of nearly a decade, has embraced point-of-sale (POS) marketing. They sure spend a lot of money on it!
However, there has been very limited utilization of POS tracking and measuring technologies, even in the face of supplier encouragement. We know that most suppliers offer financial incentives to distributors who invest in POS. That’s because suppliers know that POS works. But in order to get suppliers to pay the distributors, more than a handshake is required.
What suppliers want and increasingly require is information about the impact of the investment: What was spent, where, when, for what brands, and what were the resulting sales?
Can you see why POS tracking and measurement is critical toward providing that valuable information to suppliers?
The Beverage Alcohol Marketing Challenges
Somewhere, last year, I read an article where the statement was made that seems so close to the truth about BA marketing and sales promotions as to cause me to wince:
“No industry works harder at being lazy”.
The applicability of this statement to BA distributors seems to be accurate.
These distributors are the prime source for all POS marketing materials that is placed at-retail, in the aisles, on the shelves, in the coolers, and on the walls. Distributors collectively advertise over 150,000 beers, wines and spirits offered for sale to consumers and shoppers across the country.
However, many of the distributor sales reps, who have no training in effective POS marketing practices, are expected to provide POS marketing materials and develop retail marketing programs for their customers.
This expectation is a good thing.
However, there is generally little thought given to what POS message is desired, beyond low price or a general theme. How do these distributors and their reps decide the following:
What is the overall strategic POS Marketing Plan?
How will the plan be executed?
How will the POS marketing initiatives be measured?
What ROI is expected vs. what is actually achieved?
It is our view that there is little POS marketing campaign planning being done by distributors; Very little POS marketing goal setting, and even less order and cost tracking; And almost no measurement of the impact of BA POS, beyond the vague notion that “it works”.
So if our perception is accurate, then any of the regional suppliers and their distributors, who adopt OnTrak’s marketing technology to accomplish even some of these activities, will gain a huge competitive advantage.
If POS marketing is planned, executed and measured – and done so with the discipline possible with marketing technology software – there is no reason but to believe that even a small distributor can actually gain market share over a large one.
Isn’t it time to learn how OnTrak’s POS Tracking Software can help you accomplish all of this?
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OnTrak’s POS Analysis and Reporting Tools – 2014 Enhancements
We Listen to Our Customers
OnTrak’s customers often subscribe to our Point-of-Sale (POS) Tracking Software, first to address the problems they are having keeping track of the ordering, production and placement of POS promotional materials.
As time passes, our customers typically want and need to use the data collected by OnTrak’s solutions to analyze overall POS campaign effectiveness and return on investment.
Now in 2014, we’re pleased to offer our customers a new version of our Detail Report Writer. This version includes updates and improvements based on requirements from our customers – Something we historically do as a normal practice of our business.
The Current Detail Report Writer
The Detail Report Writer is currently included in our products – SignTrak, PermaTrak, SampleTrak and MenuTrak.
The report writer had always been an easy-to-use but powerful tool for our customers to be able to determine:
What types and sizes of POS materials are being produced?
How much is being spent on POS materials and labor?
Where and when was a campaign placed, by customer location?
What suppliers and brands were represented in marketing campaign spending?
What region, territory, sales team or ethnicity shared in the POS marketing investment?
Was the POS actually placed on-time and in the correct customer location, and can that placement be visually verified?
Once sufficient data has been captured by the OnTrak products, and stored in the OnTrak data base, many things are possible.
Queries can be created, saved and run on a scheduled basis (monthly, quarterly or virtually any periodic basis desired), in order to determine not only the answers to the preceding questions, but also numerous other ad hoc queries.
Our Detail Report Writer allows our customers to select the data they want included on the reports and present it on-screen or download it into an Excel spreadsheet. The latter allows the reports to be viewed, printed, attached to an email, or exchanged with other business systems.
The New Detail Report Writer
So far in 2014, we’ve improved and enhanced the Detail Report Writer’s capabilities in SignTrak. This has been driven by requirement from beer distributors. Enhancements will be added to MenuTrak in the third quarter, also based on requirements from wine wholesalers. Requirements for PermaTrak and SampleTrak are currently being collected.
The following represent some of the enhancement in the new version:
Processing Speed: The reporting process has been rewritten to provide more efficient data retrieval and processing resulting in much faster processing and production of reports
Sort Selection Criteria: Two levels of sorting are now available for reporting; and subtotals are provided for both levels
Summary Reporting: It is now possible to have a summary-only report instead of always having to see all order-level data; Summarization is based upon the sort levels, therefore offering a 2-level summary report capability
Scheduled Reporting: Reports can be scheduled to run monthly, quarterly or by trimester (making it applicable to beverage alcohol suppliers and distributors); scheduled monthly reports, for example, will be run in the evening of the 1st day of each month and emailed to a specific email address or group
Selection Filters: It is now possible to select multiple Suppliers and/or Brands; and with a click of your mouse allow the selection of multiple entries from any of the Filter Selection drop-downs.
As was mentioned, most, if not all of these enhancements have been developed in response to customer requests.
All of OnTrak’s POS Tracking Software solutions came to market as the result of listening to the needs of our customers and prospects. It is our passion to develop solutions to fulfill these needs.
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How OnTrak Applications Measure the Sales Impact of Point-of-Sale (POS) Promotions
One of our most popular blog topics has to do not just with the tracking features of our point-of-sale (POS) marketing technology applications, but with the measurement features provided in all of our products (SignTrak, PermaTrak, MenuTrak and SampleTrak).
During product demonstrations we show the output of our measurement report writer and query tool, and it is often when the results are displayed on-screen that our prospects seem to be most impressed.
How OnTrak Products Work
To be clear, our products collect dozens of data elements related to POS ordering, production and placements of POS promotions. Additionally, we collect data on when the promotional items (signs, menus, displays, etc.) were ordered and placed; who ordered and approved the materials; and what customers these materials went to – especially those items that have costs that can be submitted to suppliers and manufacturers for marketing cost recovery.
Our systems can produce ad hoc reports that can be configured as invoices to be submitted to suppliers and manufacturers to help in the recovery of marketing expenses.
We can import sales data from a period of time which coincides with a particular POS promotion’s display date. The customer, supplier, brand and sales information can be exchanged between OnTrak and your order management system and that information is used to trace the correlation between sales and POS marketing promotions.
Some OnTrak customers may choose to use a more robust reporting capability offered by business intelligence (BI) providers like Dimensional Insight’s Diver solution – while other companies are satisfied to use OnTrak’s “light-weight BI” query and reporting capability.
Calculating the Impact
Whatever route you choose to determine how you will measure, report and ultimately deploy your POS campaigns, you will be using a formula similar to the following:
Sales Impact of a POS Marketing Initiative
Base (or Prior Period) Demand
Incremental Demand Change During a Promotional Event
”Incremental Demand” can be either a positive or a negative number, see graphic, below:
The above example is for an established, well-recognized by consumer item that is not subject to seasonal demand variations.
We can see that there is an increase of 15% when there is a 2’ x 3’ sign presenting the customer with a lower price / “reason-to-buy” (BOGO)
An item or brand-specific floor sign (without a “reason-to-buy” message), on the other hand, apparently has the opposite impact – reducing sales by 5%. With our new prior period demand for August of 110, we see that even a (relatively small) shelf-strip promoting “buy-one get-one” (BOGO) positively impacts sales by 22%; while an end cap display, without “reason-to-buy” once again correlates to an incremental demand of negative 10%.
Armed with this kind of information, you will be able to determine what will most likely work to stimulate positive incremental demand.
Of course, to collect the data requires that you have both an Order Management System that creates and stores historical demand and a Marketing Technology Tool (OnTrak) that collects various data-elements from the ordering, production and placement of your point-of-sale promotional materials.
As noted, you may optionally want to employ an enterprise BI tool for the analysis and creation of the reports that you will use to effectively and efficiently mount your marketing campaigns to best effect.
Finally, it bears noting that in order to do analysis and measurement you must collect and retain historical demand data by product as well as POS promotional data.
Doing this without marketing technology, like that from OnTrak, makes such analysis and measurement very difficult if not impossible.
OnTrak’s suite of marketing technology tools were built with this purpose -- at-retail marketing analysis and measurement -- in mind.
If you’re looking for more than a POS ordering system, and what you really need is a POS Tracking and Measurement solution, please take a further look at OnTrak.
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