The Shift to Shopper Marketing aka POS Marketing

Increasing and improving buying decisions at the Point-of-Sale

In prior POS Blog postings, we have discussed the both the defensive and offensive 'intent' of at-retail promotional activities.

Our experience in the beverage alcohol industry is that the individuals who are responsible for point-of-sale or point-of-purchase (POS/POP) marketing and promotional advertising, have historically viewed such marketing activities as defensive. They do it because their competitors do it.

While this may have been the dominant view, a steadily increasing number of beverage alcohol suppliers, distributors and retailers are coming to understand that effective POS marketing is an offensive activity. In fact, when done properly, measured and managed POS Marketing increases sales, captures market share, and actually builds brand equity.

Tactics vs. Strategy

At-retail marketing and promotional activities have been viewed as tactics to be used to provide a temporary sales increase. But a change is occurring where suppliers, distributors and retailers consider these 'turning a shopper into a buyer' activities to be part of their overall marketing strategy.

Price reductions, buy-one get-one promotions and quantity-price-breaks are all promoted by POS advertising (signs, displays, etc.). These have become key part of consumer goods supplier’s and distributor’s strategic approach toward increasing sales in this tough economic environment.

As the economy continues to show signs of recovery, trends are pointing to the fact that most shoppers are unlikely to buy any consumer goods that aren’t being ‘promoted’. Yet numerous studies have come to the conclusion that shoppers are increasingly drawn to temporary price reductions in greater numbers than are drawn to items that can only be purchased at a discount as part of a trade promotion or 'deal'.

In short, it seems that shoppers would rather buy a product that is temporarily priced at 50% off, rather than as part of a buy-one get-one trade promotion.

The Shift

The shift away from trade promotions toward point-of-sale marketing — specifically focused on temporary price reductions — is gaining strength due to several factors: 

1. Shoppers are said to have “trade promotion fatigue"
2. Temporary price reductions generally appear to be more attractive, and
3. Price reductions don’t require the shopper to choose between products that are either 6 for $5.00 vs. another that is 5 for $6.00, but come in unequal sized containers.

Today, companies are increasing their investments in point-of-sale marketing activities in order to assure an increase in sales. Said another way, they want to achieve a good return on their POS/POP investment. To do this they need to be able to track the costs vs. the achieved sales.

More and more consumer goods companies are moving away from trade promotion spending toward shopper or at-retail marketing just as they moved away from traditional — broadcast and print — media spending in favor of increased trade promotion and POS marketing.   

Overall Marketing Strategy

Of course it is important to remember that POS marketing and pricing tactics should be executed as part of your overall marketing strategy. We believe you should not rely on just one approach — traditional, trade promotion or at-retail marketing activities. Rather, you should integrate your total marketing program to include some traditional marketing spending that works in concert with trade promotions and shopper marketing initiatives.

Combine these approaches with the appropriate measurement tools (like those found in OnTrak’s products) and you will gain an understanding of the performance these initiatives have on your most important metrics: Sales, market share, and costs.