Point-of-Sale (POS) Marketing - The Need for Change Starts Now

According to National Beer Wholesalers Association (NBWA) data, the brewing industry contributes $247 billion to the US economy. This represents more than 1.6% of the total US GDP.

Malt beverages, as you know, are distributed by the over 3,300 NBWA wholesaler members. Today, these wholesalers distribute more than 13,000 different brands of beer.  These brands reach the consumer via a three-tier system consisting of:

—  Tier 1 - Suppliers

—  Tier 2 - Wholesalers

—  Tier 3 - Retailers

All three tiers want to sell as much as possible downstream, ultimately to the retail consumer, and to do so they long ago adopted a marketing and promotional approach that has proven largely effective in persuading consumers to buy the brands they sell — Marketing at the Point-of-Sale.

The Big Beer Challenge

As the proliferation of brands continues, it has been difficult for most “Big Beer” brands to increase sales and hold onto market-share. According to a Beer Institute finding in 2013:

“Malt beverage consumption (per capita) dropped by nearly 20% since 1981.”  

Big Beer’s brands are primarily sold based on the retail price offered to shoppers. For example, consumer may be increasingly likely to consider all light beers brands interchangeable, especially when one of them is being heavily promoted at the point-of-sale.

Crafts and imports may have some price sensitivity but still have been able to keep retail prices relatively high. This provides each tier higher margins even though case volumes are substantially lower. Nevertheless, crafts and imports have continued to enjoy double-digit growth, while Big Beer sales have actually declined slightly.

Today, Big Beer has little to worry about as crafts and imports still represent just a fraction of the total malt beverage sales. However, Big Beer’s longer term threats are far from benign. According to the Beer Institute, increased beverage alcohol competition is seen as a significant issue overall.

As well, according to an August 2013 USA Today Study, Big Beer brewers like Anheuser-Busch and MillerCoors are facing no fewer than six challenges:

1. Bye, Bye Light Beer - Drinkers are shifting away from the premium lite segment
2. Taste Test - Light beer drinkers' taste buds are changing
3. Downward Spiral - Twenty years ago, beer was the alcohol beverage of choice. Today, beer has lost ground while wine has gained
4. Young Winos - Those drinkers under the age of 30 who prefer wine as their first choice have nearly doubled, while at the same time, those who say beer is their go-to drink have dropped from 71% to 41%
5. Male Loyalty on Decline — Men's drink of choice, beer, has been on the decline, and women, too, are less likely to reach for a beer
6. Poor Earnings Reports - All of the preceding challenges are the root causes for Big Beer’s recent poor earnings reports. While brewers have been able to offset greater losses with higher profits, their forecasts are continuing to suffer.

What Can Be Done?

In response to a market not used to decline, beverage alcohol suppliers and especially beer wholesalers now need to reexamine their marketing approaches, particularly their point-of-sale (POS) marketing practices, in order to regain market share and gain a competitive advantage.

Surveys that are available on the web from a wide variety of research and marketing companies have identified key retailer demands from the up-stream suppliers and distributors.  

At or near the top of the retailer’s needs from suppliers are promotions and promotional materials designed to both attract shoppers and persuade shoppers to become buyers. More and more retailers expect suppliers to help them make it easy for shoppers to locate, choose and buy the supplier’s products.

Retailers are demanding POS signage that contains high-impact graphics to be placed in the “pocket” — that sweet-spot placement most likely to catch the eye of the shopper as they enter the store or aisle where the products are on display. A place that Anheuser-Busch aptly calls the Point-of-Connection.

However, more than high-quality production values and smart placement of promotional materials, it is important to deploy marketing technology (software) with features that track, visually verify placement, measure and manage your retail marketing campaigns for maximum ROI.

Attribution Marketing

Have you heard the term Attribution Marketing?  

Attribution Marketing is the process of identifying a set of user actions or events that contribute in some manner to a desired outcome — for example, converting a shopper to a buyer — and then assigning a value to each of these events to help determine which event was most influential.

The process promotes an understanding of what combination of events influenced individuals to engage in a desired behavior — like buying your product. This behavior as noted is simply referred to as a “conversion”.

Although typically applied to on-line marketing, I think Attibution Marketing likewise applies to POS marketing initiatives.

For more information click here >> Attribution Primer by Brendan Riordan-Butterworth

Why POS Marketing Technology is the Answer

Without marketing technology the goal of POS attribution marketing — getting someone to buy your product — is difficult to accomplish. Beverage alcohol suppliers, until recently, have rarely adopted any marketing technology tools; instead they relied on traditional media buys which did, at least, provide the promise of “X” number of viewers for “Y” dollars, but little else.

The goal of traditional media buys has always been to introduce a brand to an at-home audience or to otherwise sustain or increase brand awareness of the viewers at-home. Said another way, the market exposed to the message by traditional media is not at the retailer where they could actually buy the product being advertised.

With over 13,000 beer brands in the market, deploying traditional media buys is both impractical and unaffordable, especially if the goal is to regain, sustain or increase sales and market share.

Only POS marketing technology offers the possibility of informing the shopper of the availability, desirability (the “why to buy”) and price of the product at the exact time and place the shopper is able to become a buyer of your beer brand, or other consumer packaged goods.

Standardizing on a marketing technology tool across the downstream elements in the distribution channel will provide suppliers with the data to examine and analyze individual retail outlets. This approach enables the next steps: The aggregation of local outlets performance into local groups; next, further aggregate local groups to create a regional level picture; and finally aggregate regional groups into an overall national picture. The local into regional and regional into national aggregation can, of course, be reversed if it becomes necessary to drill down into the performance of one region, local group or another.

Beverage alcohol is big business and big business needs big data. Deploying marketing technology at every level allows Big Beer to address many of the near and long term challenges it faces.