Success Story
Amy frequently purchases her favorite brand of potato chips from her neighborhood supermarket. She makes her usual purchase every week as a part of her routine grocery shopping. Today, on her way home, she received a text message from the potato chip maker (a large consumer- packaged goods (CPG) company), that informed her of an ongoing subscription-based campaign they’re running—with an opportunity to win a gaming console.
Intrigued, Amy clicked on the link. She then scanned the point of sales receipt she received at the supermarket and created an account login. After validation, she was automatically subscribed to product updates on the CPG company’s newly launched D2C promotion platform. Amy is enrolled to win the gaming console—and as a bonus, she receives a digital discount coupon for a new product just introduced by the CPG company, which she remembers seeing in a recent YouTube advertisement. Amy is also notified that she will receive an extra 200 bonus points (to be redeemed for future product credit) if she follows them on Instagram.
Executive Summary
Amy’s scenario is a great example of how a 360-degree view of the consumer, combined with trade and marketing spend, can create a success story. However, many CPG companies struggle to provide consistent and personalized experiences to their consumers, often lacking the infrastructure to deliver insights and make decisions to defend their market share or attract their next segment of consumers. According to a recent study by Forrester and cadentcg.com, CPG companies invest close to 20% of their revenue in marketing spend. However, 59–65% of that is lost money as most companies continue to target consumers in traditional ways—ones that revolve around mass marketing and short-term sales boosts that fail to address new shopping habits and preferences.
Retail and CPG industries are currently in rapid flux, which has led to significant changes to the ways CMOs plan their marketing spend. While trade promotions continue to take the lion share of the spend (consuming 50% of the budget), digital marketing has been making a meteoric rise in last five years. CPG companies are focusing on social media, digital banners, sponsored content (influencer marketing),and search ads that are contributing to higher spend ROIs. Some of the significant shifts are illustrated on the right, clearly showing that CPG organizations are trending towards everyday price management, concentrating on digital spend, moving away from traditional methods of advertising, and focusing on building brand equity.
Transforming trade promotion management in the new era of trade and marketing spend
Over the past 10 years, trade promotion budgets have doubled with close to $1 trillion being spent annually. However, 67% of them are not breaking even [source: nielsen]. Technologies, consumer behavior, and demographics have rapidly changed, requiring CPG companies to constantly evolve their marketing spend strategy to incentivize and reward consumers. In the digital world, the brands are employing a wide range of promotional strategies—ranging from social media-driven instant win contests, to sweepstakes, to co-creation labs and continuity programs that ensure the success of the promotion. But are these decisions being based on gut-driven manual processes or conscious insight-driven decisions? The following are key questions that marketing teams should be asking:
- How do we launch a promotion quickly? Will it be dynamic enough to flow into all consumer touchpoints?
- How do we position our time effectively so we can focus on building brand equity? How do we remove ourselves from shifting data manually and moving between IT systems?
- How do we get an integrated view of our promotional budget and automate the entire promotion process from planning to execution?
- What are the parameters we should consider to effectively measure our marketing spend ROI?
- How do we help the business do things quicker, cheaper, faster—but still use future-proof solutions with the latest technological capabilities?
- How do we make our solution standard, reliable, and scalable across many geographies and markets?
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