Marketing At-Retail - A Core Competency - Part 2

Part 2

Grow Your Revenue

Within the three-tier alcohol beverage distribution system, the tier that controls the most marketing and sales data is the middle tier - The wholesale-to-retail distribution tier.  It's not just that the distribution tier controls the largest quantity of data; distributors also control the highest quality of data regarding the effectiveness and efficiency of the at-retail brand messages in driving sales of their products.

Why is this?

Defensive POS Marketing

For years, advertising at the point-of-sale (POS) was considered to be primarily defensive.  POS advertising was thought by many alcohol-beverage distributors to be a necessary evil; even though they were the source of most, if not all of the at-retail signage and displays.  The only reason to “waste money” on signs was that if the Miller WD rep didn't provide POS materials, the Budweiser WD rep most certainly would. POS has certainly evolved over the years, now including displays, tap-pulls, mirrors, neon and motion signs, table tents, shelf strips, walk-in cooler wraps, drink menus and so forth. POS is now part of a distributor’s marketing plan, but more importantly, POS is now part of the offensive team.

For some alcohol beverage distributors, the recent Great Recession, when added to the societal and media changes mentioned in Part 1, has created a period where marketing at-retail, and POS management, can now be viewed as a key competitive tool — A Core Competency.

Offensive POS Marketing

Today, advertising at the point-of-sale is considered  by a growing number of alcohol beverage distributors to be an offensive weapon in the war to win the consumer’s highest compliment: Buying the products advertised at the point of sale.  And this same weapon applies to their suppliers as well.  Due to recent revenue declines, marketing at-retail materials are now seen to be central and critical to marketing best practices because the most important place for consumer to interact with suppliers' and wholesalers' brands is literally at the point of purchase.

Of course both distributors and suppliers are inspecting these marketing at-retail expenditures and insisting that these POS expenses must result in additional revenue growth.  Marketing at-retail initiatives are analyzed for "acceptable" ROI by both the suppliers and their distributors.  No longer are the distributor's POS expenses automatically reimbursed by suppliers.  Suppliers expect their distributors to be accountable for their marketing at-retail allowance spending just as distributors expect their reps to request and place POS for maximum return.

Supplier recovery dollars are still available, but claiming these monies often requires Medicare-like claims documentation and filing.  Increasingly, suppliers will require prior approval for signage bill-backs and menu and sample allowances.  Then, before the checks to the distributor are approved, suppliers will routinely require the WD to demonstrate proof of compliance and show proof of results.  Should we pity the alcohol beverage distributor who has had all of these requirements dumped on him over the past couple of years?

Not really.

The Importance of POS Marketing

Despite cost and price pressures, a relatively flat market, rising expenses and a fragmented audience, alcohol beverage distributors, now, more than ever, can or do control valuable marketing data — data that can be turned into information suppliers badly need.  According to many involved in alcohol beverage distribution, "Wholesale distributors can strengthen the influence of the brand message on consumers by leveraging the information collected at the point of sale."

Finally, it is critical for both distributors and suppliers to recognize the importance of a marketing strategy that incorporates retail point-of-sale materials as an equal partner with print and broadcast media in the marketing-mix.  Indeed, the consumer makes both the selection and the buy decision primarily at the retail point of sale.  This is where the action is. Brands, market share and revenue are now made at retail, at the point of sale.  If you consider selling your suppliers’ products your primary business activity, you should also understand that your command of marketing at-retail best-practices is a core competency of your business.

Next Steps

In upcoming blogs we will expand our discussion to the marketing at-retail tools to help distributors manage and control POS materials and business intelligence — one of alcohol beverage distributors’ and suppliers’ key contributors for success in a challenging market.