One Blog |September 21, 2012 | POS Tracking Software

You Can't Manage POS Marketing Unless You Track and Measure It?

Mark Fullerton

You Have to Track & Measure Your Point-of-Sale (POS) Marketing Campaigns, If You Expect to Manage Them

“. . . any size company that deploys technology to track, manage and measure their retail promotions will benefit from the analysis and reporting such technology provides.”

We’ve been discussing at-retail promotion spending (aka, POS, Shopper, In-Store or Trade Marketing) and the importance of tracking POS to determine the value of knowing your return-on-investment (ROI).

I have yet to find — in one place — some of the publically available data that underscores the tremendous amount of spending that goes on with at-retail promotions. But the following research may give us a better picture of the impact of, and issues related to POS marketing.

I’ll base my discussion on US-only data because of the plentiful and readily available public data about the US economy, much of it from US government websites and watchdog sites. This information is focused on that part of the US economy related to at-retail promotions for consumer packaged goods.

Consumer Package Goods Economic Data

As you can see in Figure 1 below, the US economy (like the national debt) is about $16 trillion. Of that total, about 13% or $2 trillion of US economic activity is derived from consumer packaged goods (CPG).

The list of products and companies that are classified as CPG is very large. A partial list of the products considered include: household goods, food, beverages, electronics and clothing. Beverages sales alone represent about 65% or $1.3 trillion of total CPG industry sales. Beverage alcohol accounts for some $167 billion in sales, or about 8.4%, of total CPG sales.

In fact, over 1% of every dollar spent in the US is spent on promoting CPG products.

Figure 1 - Consumer Packaged Goods Economic Data (US)
Category	Amount
US Economy (2012 est.)	$16 Trillion
CPG Sales	$2 Trillion
Beverage Sales	$1.3 Trillion
Beverage Sales % of CPG Sales	65%
Beverage Alcohol Sales	$167 Billion
Beverage Alcohol Sales % of CPG Sales	8.4%
$ Spent on POS marketing	$20 Billion - 1% of total CPG sales

Research conducted and published by several consumer goods, shopper marketing and point-of-purchase organizations have informed us for several years now that at-retail promotion spending is one of the biggest expense items for CPG suppliers, distributors and even retailers.

The most startling statistic is that POS promotions are the second largest expense item for CPG manufacturers — right after cost-of-goods-sold (COGS).

Consumer Goods Technology Study (CGT)

A recent CGT study (Note 1) has quantified this by revealing some stunning findings including the fact that more than 50% of CPG suppliers spend between 10% and 20% of gross sales on promotions, with about 30% spending less than 10% and 17% spending an eye-opening 21% to 25%.

According to CGT research (Note 1), the larger the company, the more likely the company is to consider analytical capabilities as “very important.”

OnTrak Perspective

Although we have come to somewhat similar conclusions based on our customer base, we have also found that virtually any size company that deploys technology to track, manage and measure their retail promotions will benefit from the analysis and reporting such technology provides.

Many of the CGT study findings are echoed by our customers — beverage alcohol distributors of all sizes - from under $10 million to over $3 billion - from all over the US.

Generally speaking, those involved in the beverage alcohol supply chain are troubled by four things:

The ever-escalating costs of POS campaigns
Their inability to track how much is spent to promote specific products - Where the money is spent (by customer, supplier, and brand), when, and how it was all justified
The sales effectiveness and ROI of their at-retail promotions and
The management of supplier recovery programs

Overall, most CPG companies — especially those in the beverage sector — still find it difficult to determine the impact of their at-retail promotions on sales results.

They lack an awareness of the software tools that are available today to track and measure the effectiveness of at-retail promotions — for example, correlating POS marketing investment to sales results.

Yet, those CPG companies who do adopt tools to track, measure and manage their at-retail marketing programs, find themselves at a competitive advantage when compared with their peers who do not take advantage of these products.

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