Managing Marketing At-Retail - Your Competitive Advantage - Part 2

Part 2

The New Normal — A Paradigm Shift

We have now arrived at the point in time when the importance of Marketing At-Retail initiatives has climbed to the top of alcohol beverage distributors (ABDs) merchandising and sales ladders.

They are at the place where both suppliers and distributors are spending large and growing sums of money on POS marketing materials — including Custom POS, Beverage Menus, and Beverage Samples.  Perhaps triggered by the Great Recession of 2008 — 2010, shareholders, executives and managers of ABDs are beginning to scrutinize POS costs, to ask questions including:

“What am I getting for this POS spending?” And, “How can I track and measure the impact of my promotional spending” or “Am I recovering all supplier marketing bill-backs and allowances?” 

The Paradigm Shift

A growing number of executives have come to recognize that their “Sign Shops” are a critical part of both their sales, customer service and support organizations.  More than just a cost center, their graphics and sign departments are central to their merchandizing and brand management activities.

Those distributors who have reached and recognized this ‘paradigm shift’ often look first for POS Tracking Software tools to bring order to the chaos with respect to the ordering, tracking and reporting on the costs and efficiency of their Marketing At-Retail departments and practices.  ABDs who are keen to cut costs and assure a complete and timely marketing recovery claims process will look for solutions that will help them rapidly minimize expenses and maximize bill back recovery.

Two Approaches 

1. Outsourcing

A distributor may decide to ‘outsource’ the sign and menu production functions of a branch or the company, with the intention of slashing POS costs.  However, a growing number of market-leading ABDs have discovered that outsourcing a core business process like marketing at-retail, may often lead to turn-around issues or delivery delays. More importantly, the distributor may become detached from their local customers.  

Even though costs may be reduced by outsourcing, the most customer-service oriented distributors find that they have difficulty living with the two or three-day per-week delivery schedules that are standard with outsourcing.  In response, they will often authorize additional shipments and rush orders eliminating their intended cost reductions.  In some cases, their POS costs actually rise as delivery schedules suffer.  

Remember: All Marketing At-Retail, like all politics, is local.

2. Building Your Own (Insourcing)

A distributor may attempt to build a POS ordering, POS tracking or POS management system.  They realize the need for a software application to reduce cost, improve turnaround time, and measure the impact of their marketing at-retail initiatives.  The problem is that most ABDs are not software development companies, and they may lack the skill necessary to become one.  Their core operational competencies are sales, delivery, POS tracking and management, and other merchandising and promotional activities, not software development. 

The Moment of Opportunity

Distributors, who recognize that their print shop is central to their sales and merchandizing core competencies, should look for a partner whose core competency is building and supporting POS tracking and management systems for beverage wholesale distributors. 

Many ABDs are facing significant challenges: Ever tightening margins; the threat of supplier initiated consolidation; or a hostile takeover if they don’t grow market-share and volume.  In the face of all this they are looking for opportunities to improve both the efficiency and effectiveness of their organizations. 

Fortunately there is at least one more way to fight back, to gain a competitive advantage — to survive and grow.

POS Tracking Software applications are being deployed at many leading alcohol beverage distributors.  These tools provide a way for ABDs to gain control of runaway POS costs, and manage the return on investment from POS marketing.  These same distributors have recognized the value of applying technologies and adopting industry best-practices to their Marketing At-Retail and sales promotion initiatives.  The key is selecting the right partner.

— Mark Fullerton