One Blog |November 7, 2014 | POS Tracking Software
What Is Your Return on Your POS Promotions Management Investment?
Articles and books on the subject of retail marketing often state that point-of-sale (POS) promotions are to be used to create or increase brand awareness.
I can’t think of any consumer packaged product (CPG) that doesn’t use POS to some degree.
The amount of money spent promoting products in the retail environment is staggering. Currently, over $21 billion is spent on promotions at-retail in the US alone; and that amount is growing between 5-7% annually.
Here is another staggering data-point:
Only about 50% of retail promotions are effective.
A recent Boston College Study on Trade Promotions Management put it this way:
“Studies show that between 50-90% of promotions are not profitable. Many companies are not performing any post analysis to determine which promotions are profitable. Without this analysis, the same unprofitable promotions are run over and over again.”
Assuming you agree with the statement that “POS promotions are . . . used to create brand awareness”, I would like to suggest you consider the following:
The broader goal of POS is — or should be — to increase sales.
Brand awareness may lead to increased sales but it will be more difficult to measure the sales increase provided by your POS when its content provides no direct benefit or incentive for the retail customer to buy.
Hopefully you will agree that POS placed without even the outline of a strategy to increase sales and, in some cases, without even a clearly stated goal to “create or build” awareness of your brand, is a poor use of marketing dollars.
Suppliers and distributors must set retail marketing/promotional objectives, execute, measure and analyze results and adapt the campaigns with the goal of increasing POS marketing’s impact on increasing sales results.
It is our belief that you should plan as many of the factors involved in your POS initiatives as possible, not overlooking the following:
- Direct POS acquisition or development costs
- Placement cost, opportunity costs and timing
- Recovery dollars available from manufacturers and suppliers to offset costs
- Post promotional sales analysis, including a comparison of sales ‘before and after the promotional initiative’
In short, if you track the costs of your POS promotions and can correlate these costs to sales during the promotion period, you will have a much clearer idea of how effective and efficient your promotional initiative was.
You will then have information about what to do in the future with respect to your retail promotions.
Data collected, complied and analyzed about your POS campaigns creates this information. And, an informed CPG marketer has the resources — the power of information — to create POS programs that will increase sales, customer loyalty, revenue and profit.
Before you dismiss these notions as impractical due to the lack of marketing technology tools to help with the tracking, measuring and correlating of POS costs to outcomes, please take comfort in the knowledge that OnTrak Software solutions have been providing the technical tools required to track, manage, measure and verify the costs, impact and effectiveness of POS campaigns since 2005.
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To download the Trade Promotion Management Study, click this link: