Why 2017 is the Best Year to Track, Measure & Manage POS Marketing

Start using OnTrak’s digital tools to achieve your in-store marketing objectives this year. 

The US Beer Market

The US beer market is defined by stiff and ever growing competition, and by declining demand for many of the “big name-brands”. This despite the apparently insatiable appetite for craft brews, which is indicated by two new breweries coming on-line virtually every day. 

The major companies in the beer industry, like Anheuser-Busch and Miller-Coors, are able to “sustain” their positions in this difficult climate largely on the strength of their company’s brand and image and, increasingly on product branding and advertising at-retail — What we call point-of-sale (POS) marketing strategies.

The Impact of the Super Bowl

But wait, with respect to Anheuser-Busch, isn’t it true that they spent almost a quarter of a billion dollars solely on Super Bowl ads in the ten years from 2002 — 2011? 

Yes, and they do continue the practice, perhaps more out of tradition than for ad-spend effectiveness or efficiency. I’d add that Super Bowl ads aren’t really designed or able to increase the sales of Bud or Bud Light for two reasons:

1. By the time the Super Bowl ads have been seen, the beer for the millions of Super Bowl parties has already been purchased; and,
2. Mass media advertising, such as spots seen during sporting events on TV, is not able to influence a consumer who is shopping and in the position to become a buyer. 

Only POS advertising can do that.

Recently, there has been a decrease in the popularity of NFL professional football. There are at least two reasons for this: 

1. The lower tolerance of audiences for the sport’s apparent inability or unwillingness to guard against player’s head-injuries and the recent spate of apparently unpatriotic players seen disrespecting the American flag. NFL viewership is “in free fall” (Forbe’s Oct 3, 2016).
2. TV advertising has already become: “Too much cash for too little splash!” For big beer, as well as for many crafts and imports, TV is not the place to help sustain their market share, or to grow it.

Alternative Approaches by Breweries

In response to the realization that competition, although often from very small craft breweries, was having a negative impact on beer sales, the big brewers have embarked on a plan to “encourage” their local distributors to step up their point-of-sale (POS) marketing programs.

Initially, the breweries tried to incent distributor’s POS spending if they would, essentially, buy more of the brewery’s beer. Or they would provide additional POS allowances if the distributor increased the percentage of the brewer’s brands they carried or sold to as much as 95% of the distributor’s total volume sales.

Although the incentives were real and perhaps viewed as attractive, distributors who attempted to increase their volume of a given supplier’s brands to 95% would often see a decline in their revenue and profit. This was because they had to give up selling some of the most popular “other brands” to another distributor in their geographic market. This didn’t sit well with many distributors.

What Next in 2017?

For many distributors 2017 means the arrival of yet another required brewer's tweak to the distributor’s local marketing mix.

In 2017, additional point-of-sale costs will be shifted to distributors while breweries focus on “inter-personal” marketing. Or said another way, a direct payment to the sales reps. The problem with this approach, according to the distributors I’ve talked with, is that person-to-person (P2P) marketing has never demonstrated more than a modest amount of influence when it comes to actually increasing the demand for consumer packaged goods like beer.

And who will be making these payments beyond year one, should the program be unsuccessful?

The reason for P2P’s limited success is that it is only likely to stimulate sales during the period of time when the sales person is actually at the retail location. For sales reps with sales routes numbering as much as 100 accounts, there is a very limited period of time when the rep can be “at-retail”, thus limiting the effectiveness of such an approach. Simply providing a temporary monthly financial incentive for the sales reps to spend more time and to “place more product” at their accounts will likely have little impact upon sales, once the increased return of out-of-date beer is factored in.

A Better Approach

POS Marketing: signs, displays, shelf-strips, tap pulls, mirrors, neon’s, display enhancers, etc. can be at the retail location literally the entire time the on or off-premise retailer is open for business. 

As you know, POS marketing campaigns are both effective and efficient. 

In other words, POS marketing works to turn shoppers into buyers. This increases beer sales and does it for a relatively low cost. 

Handling the Challenges

It is true that distributors will have to continue their support for an increase in POS placements, with both the increased cost burden and reporting requirements that will come from the breweries and which distributors will bear. 

In a Beer Business Daily survey in August, 2016, “Marketing Costs” were included in the top-three concerns for 424 Anheuser-Busch and MillerCoors distributors who responded. The increased cost and reporting impacts of POS are some of the reasons for this survey’s focus on the increased in marketing costs.

It is also why these respondents, who are our customers, have asked us for additional features to be added to our “Digital Tools”, SignTrak and PermaTrak, for tracking temporary and permanent POS respectively.

Please consider joining our customers, nearly 100 distributors across the country, in Tracking, Measuring and Managing your POS Marketing investments.

The best way to see the value of all of the OnTrak POS Tracking Solutions is to view a live, online demonstration. 

Click the following link to: Request a Demo, or call one of our product experts at 513-936-4041.