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Promotion management in FMCG in 2017

Willing to 'work today for tomorrow's turnover', manufacturers spend major budgets for promotional targets, but frequently results are out of pace with investments.
Bluntly said: lots of money is spent, but nearly all promotional activities lose money.
Since October 2003, at the start of the price war by Albert Heijn, the scale of promotions has increased dramaticaly, with pricing as central issue. Today's consumer buys from one special offer to the next. And here is the onset of the spiral of misery.

Profit centre
Due to all the promotional volatility in Food and Drug, stock levels in retail grow exponential. And subsequently, the manufacturer is asked to decrease these. Lots of sales promotion -for instance in personal care- cost money twice. Who's kidding who?
And isn't the industry losing track at an alarming speed?
The most striking components are the depth of promotional discounts and the high cost of flyers. Meanwhile, the flyer is making the retailer so much money that this medium in itself has become an interesting profit center for the retailer.

Fierce resistance
Manufacturers trying to reduce the discounts and the flyer costs that went wild, hit on fierce resistance. Streetwise retailers have learned how to deal with this. They simply threaten with sanctions. They now consider the profit on flyers as their lawful privilege or as compensation for a disappointing trade margin.
This probably explains the interest in promo evaluation tools. But how exact and purposeful are these tools? Are all relevant aspects observed?

Sales Promotion evaluation tools.
What is the resulting value of a specific sales promotion? Which element is successful and what's more important, 'which element is ineffective'?
Historical numerical data about the effect of sales promotions in FMCG are no guarantee for the success rate of subsequent promotions. One moment a promotion yields 500 display locations and a subsequent promotion doesn't even acquire half of these. Causes are unclear. And what's remarkable: even retailers with all their quantitative scanning data have great difficulties estimating the right promotional volumes. Even experienced players in retail have their glitches in sales forecasting. Retail is a complicated line of business.
But manufacturers have a world to win, just by observing the retailer's targets and logistics with a critical eye.

The correct analysis. The proper knowledge. De right tools.
The success rate of a sales promotion in FMCG depends on many factors. Market research agencies like Nielsen, GFK and IRI attempt to quantify variables but by doing this they ignore the fact that qualitative aspects determine the [quantitative] result primarily.
For quantitatively oriented market research agencies it's simply impossible to incorporate the many peripheral variables that are relevant in their research.
Considering the complex nature of quantitative research methods, especially complex because it differs for every category in every single sales promotion, these methods are gravely simplified. But by simplifying their research methods and the promo evaluation tools, these agencies incorporate too many unknown factors in their result.

Pioneer stage
In sales and marketing organizations, sales promotion management is still in a pioneer stage. Nothing is 'managed', nothing is verified and nothing at all is evaluated. Now where's the concept of the 'learning organization'?
Bierman assists manufacturers to define their promotional strategies and to meet sales promotion targets.
We have the relevant skills and technique at our disposal, enabling us to predict the success rate or failure of an activity in sales promotion. And we can show how corrections need to be made where necessary. No simulation but actual practice.

Pingpong session.
Call us for our interactive pingpong session: ''the sales promotion mix of the retailer'' and we will show you the strategy of the [major] retailers in their approach of your market.
Or we can have a look at promotional logistics in your category.

The advice. The implementation
Bierman's consultancy doesn't stop at providing advice. Translating the findings into practice and supporting Sales and Marketing are two of our core activitities. On request and on behalf of manufacturers, we participate in sessions on head office level.

FMCG-nieuws "on line"
"Trends in Distribution and Food Marketing" is a publication by Bierman distributed free of charge via e-mail. Our newsletters are based on information gathered by us during our daily contacts with retailers. They are distributed to manufacturers in FMCG. Publication is infrequent: only when there's something to report. Subscription is possible: send an e-mail to josbierman@fmcg.nl with the text "free subscription" in the message header or message body.


Facts & figures carry a shade of perspective
but do they hand you solutions as well?

P.J. Bierman
Phone: +31 315-24.34.94
Email: (<josbierman@fmcg.nl>)