One Blog |July 21, 2011 | POS Tracking Software

Is Your In-House Point of Sale Marketing Department Expendable?

Mark Fullerton

This year we have heard stories about some well-known wine distributors that have outsourced their Point-of-Sale (POS) marketing organizations to a third party. This includes both print shops and graphics department personnel and equipment.

Many long-term ‘print shop’ employees have been negatively affected by these reductions in workforce. The people who have been displaced are quickly able to find new opportunities because of their skills, experience and connections in the graphics, printing and advertising communities. Ironically, some of these ex-employees have gone to work for the very companies who are doing the outsourcing; while others have started their own graphics and promotion businesses.

Some of these talented folks, who have spoken off the record, have expressed confusion (and disappointment) about their views on the changing role of point-of-sale marketing promotional materials and a company’s decision to outsource.

The confusion seems to center around their recognition of the rising importance of ‘at-retail’ marketing programs within their former employers, and their awareness of the significant benefits of an in-house operation.

POS Marketing - A Mission Critical Part of the Business

When POS Marketing (including menus, temporary and permanent signage and other POP materials) is seen as the most effective and efficient marketing tool for increasing sales, it makes me wonder why companies even consider using an outside, often out-of-state, vendor for such a mission critical part of their business.

What would make executives think that this key business driver — at-retail POS initiatives — would be a good candidate for outsourcing? What makes these companies think they can do without a local creative source for POS design and execution, and expect to keep the same service level with their customers? And finally, what cost reductions are truly possible, especially if a company now hires a former employee as an outsourced consultant? Does that make sense? The recently furloughed employees have good cause for their confusion.

Is It Just a Matter of Lower Costs?

Some of our customers (often recovering from a bad outsourcing experience) explain that the primary motivation for shutting down the in-house creative, graphics and printing department was cost. Simply lowering cost seems far less compelling when:

The outsourced at-retail promotions and POS programs start to seem all too generic and not localized to the distributor’s market
The quality of menu covers and signage is lower, and the materials are less customer-focused than when produced in-house.
The signage and menu delivery drops from 6 days per week to 2 days and turnaround time goes from days to weeks
The costs are only lower if the distributor is willing to accept 2 day per week delivery

At-retail promotional materials development is a key sales weapon in a distributor’s sales arsenal. Giving it to a third party, perhaps several time-zones away, in an attempt to cut the POS budget, can often lead to the loss of a distributor’s competitive advantage.

For a distributor’s customer a great promotional/sales partnership is an integral piece of the value-proposition. For the supplier and the retailer alike, the distributor who has an in-house staff dedicated to meeting both his customer’s and supplier’s expectations, with respect to brand building and product promotions, is irreplaceable.

We as business people need to support the organizations that have created the best localized at-retail marketing impression possible.