One Blog |August 22, 2018 | POS Marketing Software
Beverage Distributors - Your Best Marketing Spending Today is Point of Sale Marketing
No matter how you look at it, consumer packaged goods (CPGs) and the marketing of them is very big business.
And since beverages make up nearly two-thirds of all CPGs what we are about to discuss applies directly to beverage distributors — our ideal customer.
The Impact of CPGs
Easily-googled sources today estimate the global economic impact of CPGs retailing to be more than $15 trillion annually.
We can put this information into perhaps an even more impressive and breathtaking perspective:
CPGs account for more than 20% of the world’s economic activity. And, Investopedia.com notes that CPGs contribution to US GDP now exceeds $2 trillion annually.
If you are of a certain age, perhaps younger than 25, you may be unaware of and perhaps may not even have heard of the way CPGs used to be marketed. Maybe we should state this again by saying you may not be aware of how CPGs used to be successfully marketed. You’ll see this theme again later, but in a different light. Without making this too much of a walk down memory lane, there are two wide-ranging eras that have shaped the way CPGs were and are marketed:
Era #1, Post World War II through the mid 1990’s; and, Era #2, 1995, through today.
The Two Eras of CPG Marketing
Era #1 witnessed the birth of unprecedented consumer demand, unbridled economic optimism and the rapid proliferation of CPGs. Also during this era, the retail landscape changed from many independent, typically small, retail outlets to fewer and fewer, typically larger and larger retail chains — consolidation.
During this era, we also saw the birth of a new medium, TV, with typically no more than 3 channels per market (and not all markets served), to yet another birth: Cable-TV, which provided, for most Americans, TV viewing availability and eventually an explosion in the number of channels — in short, television extended its reach to the majority and fragmented its offerings almost simultaneously.
Era #2 where we now live, saw the inception of the Internet, mobile phones — now, almost pervasive communication — video on demand, practically unlimited channel choices and social/mobile media. For many — at least the coveted millennial demographic — latter-day Era #2 is all they’ve ever known.
During the nearly 70-year period these two eras represent, we’ve also seen a CPGs retail transformation.
During most of the first era, suppliers ruled and the newly minted medium, TV, aided and abetted suppliers’ dominance. Of course, the lack of national retail chains throughout much of the first era also helped suppliers attain and retain control over consumers buying tendencies. As the first era changed, ever larger retailers began to wrench control from suppliers if for no other reasons than they had the clout via their newfound buying power to essentially dictate the terms of merchandising and marketing.
As technology has again enabled and encouraged broad disruptive change in markets and marketing, we are, today, fully under the “control” of the second era which has seen yet another market shift from the retailer to the individual shopper, thanks in large measure to Internet capable cell phones in the hands of virtually every shopper.
Please note the word “shopper”. Today, the target market is not necessarily the consumer — rather it is the shopper who wields the economic power now. The consumer and the shopper are not necessarily the same individual — and it is the shopper who makes the decision to buy at the point-of-sale (POS) sometimes called the moment of truth.
The Ways CPGs Are Marketed
At the same time this nearly 70-year transformation of America’s CPGs control and dominance from supplier, to retailer to shopper has happened, there has also been a similar transformation going on in the way CPGs are marketed.
When we had only ABC, CBS and NBC with 3 to 4 hours total of prime-time programming per night TV advertising ruled. For relatively little money, commercial placement perhaps as few as 3 times or as many as 9 would practically guarantee every TV-audience member in America would see a message about your product, and without the ability to fast-forward through commercials, there was no concern that the audience would skip over spots.
Of course, the 3-channel per market period didn’t last long and channel proliferation and retail consolidation and nationalization combined shifted the need and place to market, and in the process began to sow the seeds of control in favor of individual shoppers.
Where we are today is at a place and time that clearly demonstrates successful CPG marketing and sales results can be achieved via known and measurable approaches yet still relies heavily on outdated strategies and tactics. It almost seems, at times, as if things are as they were during the fictional Mad Men era. It seems that much of the way CPGs are marketed today is the same as they used to be successfully marketed.
CPG TV advertisements continue to erode in their ability to influence sales. Indeed, due in no small measure to the proliferation of brands and products, spending billions on TV advertising for CPGs is a wasteful — i.e., unproductive — economic/marketing practice. Despite the emperor having not clothes, spending on traditional media advertising grows by almost 6% per year, according to IBM’s Institute for Business Value.
A Successful Approach to CPG Marketing
We have arrived at a point in the history of marketing where the importance of marketing to shoppers at the point-of-sale is at its highest point ever; yet CPG’s marketing executives report one of their greatest concerns is the lack of tools to track, measure and verify the impact, placement and ROI of their POS marketing initiatives.
Nevertheless, marketers from all walks expect CPGs POS marketing will continue to increase — almost as if “We know POS works, so we’ll just keep spending more on it [and hope for the best?].”
Now is the time for CPG marketers, particularly in the largest section of the CPG marketplace — beverages, which account for nearly two-thirds of all CPGs — to rethink their POS marketing approach with the goal of understanding how much they’re spending, what they’re spending it on, where it’s being placed and what the correlation is between POS promotional materials and sales.
Once they can manage the ordering process, production and measurement of their in-store initiatives, they can begin to work toward deploying marketing campaigns with ever improving ROI and reducing or eliminating unproductive POS as well as moving away from or changing other, traditional forms of ineffective and expensive marketing.
The Good New
OnTrak develops and sell software to Track Measure and Manage your investment in point-of-sale marketing initiatives and to determine the return on that investment.