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.

Background

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.

They taught:

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:

• Creating both short and long-term sales - Increasingly, brand recognition without an increase in sales is seen as a waste of corporate cash or a lost opportunity for top line growth
• Persuading a shopper to become a buyer of your brand now and in the future - Brand loyalty isn’t an afterthought, it’s just subordinate to “this quarter’s” revenue needs
• Encouraging “other-brand” shoppers to try your brand - Also known as “trial” and also to make repeat buys
• Providing the ability to track and measure the impact of your at-retail marketing message - traditional advertising has always been difficult to measure, but there exists today the tools to correlate incremental sales to POS campaigns  

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.