five ways to stop leaking revenue
TRANSCRIPT
MEI Computer Technology Group Inc.
FIVE WAYS YOU CAN STOP LEAKING REVENUE TO RETAILERS
ATTENTION CPG MANUFACTURERS:
Superior Trade Promotion Management can lead to a competitive advantage
Source: Infosys
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10-30% of revenue spent on trade promotionsSource: AMR Research, Forrester & TPMA
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of your sales force’s time is spent manually managing trade promotions30% Source: Infosys
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of CPG Executives are feeling the pressure from retailers to provide insight and ideas to drive incremental sales.
65% Source: AMR Research, Forrester & TPMA
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67% of the marketing budget is used towards trade promotion spendingSource: Infosys
MEI Computer Technology Group Inc.
FIVE WAYS YOU CAN STOP LEAKING REVENUE TO RETAILERS
ATTENTION CPG MANUFACTURERS:
Presenter
Rob BoisDirector of Product MarketingMEI Computer Technology Group
ModeratorAbby ChitesterDirector of MarketingMEI Computer Technology Group
Agenda
• Introductions• Today’s Reality• Technology & Processes• TPM Performance Gaps• Disciplined Approach• Trade ROI• Questions
Who is MEI?
A leading developer of trade promotion
management software for the Consumer Packaged
Goods (CPG) industry
Offers a complete and proven solution that enables consumer packaged goods CPG companies to successfully plan, execute and analyze all aspects of the trade promotion management cycle
Established in 1983
Over 40 Employees with Offices throughout North America
Client base is made up 50 clients ranging from
$30M to $3B in sales
Headquartered in Montreal, Canada
The Growth of Store Brands
• 35% of shoppers are trying store brands for the first time
• Store brands cost 1/3 less than national brands
• Retailers are rationalizing down to one or two national brands
• Consumers believe store brand quality is at or near that of national brands
The New Shopper
• Cutting coupons• Shopping for deals• Highly price
sensitive
• Expects high quality• Expects innovation• Fickle
• Millennials• Gen X• Gen Y• Boomers
• Moving to store brands• Stock outs = brand
swap• Less responsive to
advertisingLess brand
loyal Fragmented
Cost conscious
Higher Expectations
Rising Economy = Rising Costs
Fuel Prices & COGS
Retail Price
Pressure
CPG’s Response:
• Buy down price
• Maintain share at any cost
• Push volume over profitability
• Shift dollars from advertising to trade
The ResultTier 2 and 3
brands can’t compete
Margins get eroded
Promotion measures get
skewed
Trade spending increases
Retailers increase pressure for trade
dollars
Deductions & post-audits
increase
The Tipping Point
• Now that costs are increasing at the same time as trade, margins suffer
• Buying down price to retain volumes becomes unprofitable
• Innovation suffers• Trade spending gets out of control
Tactic #1 – Change Measures
• 74% of CPG companies still measure promotion success by lift, and not profitability *
• Above the line and below the line tactics are disconnected
• The true cost of volume and share is not known• Track the true long-term effects of promotions• Consider that market share goals may actually
erode margin goals
* CGT Trade Promotion Effectiveness Survey 11/09
Tactic #2 – Innovate on Promotions
• New product introductions are highly risky and expensive
• Consumers expect innovation to come from national brands
• Innovate on tactics, bundling, and cross-channel promotions
• Give the perception of product innovation without the costs
Tactic #3 – Adopt a Culture of Change
• CPG fears change therefore it rejects it• Think of trade as joint value, not a cost of doing
business• Encourage creativity with promotions• Don’t settle for “we’ve always done it this way”
Tactic #4 – Promotion Rationalization
• Just because you did it last year doesn’t mean you should do it this year
• Fewer less complex promotions could yield similar or better results
• Shifts in the overall marketing mix could produce significant results− What if we shifted 20% from trade to online
advertising?• Shifts in regional of even banner/store mix
can also pay large dividends
Tactic #5 – Adopt Centralized TPM
• Nearly 60% of CPG firms still track trade through Excel
• Manual effort is staggering• Central visibility is non-existent• Metrics can’t be tracked• History isn’t recorded• Copy-paste becomes the de facto
promotion planning method
Trade Promotion Management
Headquarter Planning
Account Planning
Account Execution
Reconciliation
Post Promotional Analysis
Conclusion
• The status quo is potentially a road to disaster• Only shifts in metrics will change behavior and
process• Inability to track and mange trade centrally is
a show stopper• Don’t fall victim of retailer “entitlement”
Q & A
