One Blog |July 6, 2015 | POS Tracking Software
The Changing Face of POS Marketing — Or At-Retail Marketing
One Thing We Know For Sure
There’s one thing that we should get out of the way from the start:
Marketing messages, delivered at the point-of-sale, are more important to increasing sales and building brand and product identity than ever before.
So, what do we mean when we say point-of-sale (POS) marketing?
For us at OnTrak, as well as with our prospects and customers, point-of-sale marketing — or just “POS” — means virtually anything that is used to promote brands and products to the retail consumer at the place where they buy.
This message has become stronger and stronger as we have met with more and more beverage alcohol suppliers and distributors over the nearly 8 years we’ve been in business.
Types of POS Marketing Materials
In the case of beverage alcohol, POS includes both temporary printed signage — typically produced by distributors in their own print shops, and permanent signage — acquired by distributors and loaned to their retail customers.
A broader definition and utilization of permanent POS materials includes displays, lights, umbrellas, glassware, mirrors, coolers, cabinets, table tents, chalkboards, logoed apparel, door pulls, tap pulls, coasters, bar-mats, corkscrews and bottle openers — and the list goes on.
Increasingly, food and drink menus — supplied and usually financed by distributors — and B2B product samples can also be considered POS marketing or promotion. Beer, wine and spirits B2C tasting events could be included in the POS marketing-mix basket.
The Cost of POS
It is true that some of the POS that distributors place is almost certainly a total waste of time and money — and it’s not an insignificant amount.
The average paper or Coroplast sign created by every beverage alcohol distributor in the US costs between $30 and $50 each. It is not uncommon for a 5-million case malt beverage distributor to generate between 10,000 to 25,000 signs annually. Many of our customers generate over 100,000 signs every year — and every year their cost of POS increases.
To put this in greater context, the beverage market comprises about two-thirds of the two-trillion dollar US CPG market. POS for these products certainly appears to be where the lion’s share of the approximately $20 billion per year, at-retail marketing expenditure is going.
So, why am I suggesting some POS spending is probably ineffective and wasteful?
Simply put, my opinions are based on both an assumption and an observation that most beverage alcohol distributors, and their suppliers, don’t have an accurate ROI measurement of their current investment in POS.
This despite the fact that there are POS tracking tools available, that when coupled with a distributor’s existing product, customer and route accounting systems, will provide them with the data necessary to measure the effectiveness of their retail marketing campaigns.
Here’s what is even more confusing: Distributors continue to increase their spending on POS because their customers and suppliers “urge” them to do so. In some cases it’s a mandatory requirement. On the one hand, the increase in POS spending is perhaps a good thing since POS does work to increase sales and brand awareness. On the other hand, this increase in POS spending may be unnecessarily wasteful since much of it goes unmeasured and unmanaged.
But regardless of the costs, it is also true that POS works.
Many notable studies conducted by the ANA, AT Kearney, CGT, GMA, P2PI, POPAI, and Shopper Marketing Magazine have documented the effectiveness and efficiency of POS marketing for all consumer packaged goods. (See Note) These impressive companies, have studied POS effectiveness, and their analysis proves that POS works.
We believe most beverage alcohol distributors use POS both offensively and defensively. But we also believe POS is really a competitive tool. So, while distributors may be increasing their spending on POS, they also need to track, measure and manage POS effectiveness and ROI, and recover more of these increased costs from their suppliers. If you’re not addressing the whole POS life-cycle, then you’re likely to be spending more and valuing POS less.
Today, the American consumer is much less likely to be stimulated into buying simply by seeing paper or permanent signs, mirrors or glassware displaying a brand’s logo. Part of the reason for this is the proliferation of the number of beers, wines and spirits. Craft beers and spirits have rapidly increased in number, and ironically both shoppers and consumers, who may not be the same person, now look to POS materials to educate and inform them about beverage products in the bottle, not just a creative name and logo. This same thinking can be applied to wines, now that we have surpassed 105,000 wine labels available to consumers.
Traditional, “image building”, POS may not be sufficiently influential today. With well over 200,000 beverage alcohol products, and many more non-alcohol beverages available to the American market, today’s beverage buyers at retail outlets, bars and restaurants are seeking more facts before they spend $11.00 on the latest and greatest 4-pack of beer, or $10 on a pint, to put a finer point on it.
The current opportunity is to use POS marketing as the most efficient way of communicating the information retail customers demand before they take a chance on your brand or product. If you use and measure your POS marketing materials appropriately and effectively, you will stand a much better than fighting chance of success.
How OnTrak Helps
I’d be remiss if I didn’t remind you that OnTrak offers a suite of POS tracking, measuring and managing applications (SignTrak, PermaTrak, MenuTrak and SampleTrak). These solutions can be deployed in a few weeks, and cost less than you might think. On average less than $15 per month per rep and merchandiser.
To learn more about OnTrak and our POS Tracking Software, please click this button:
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Note: ANA: Association of National Advertisers; CGT: Consumer Goods Technology; GMA: Grocery Manufacturers Association; P2PI: Path to Purchase Institute, POPAI: Point of Purchase Advertising International.