CPG Marketers Need to Reevaluate Trade Promotions
In a Digital World: Wipro Technologies
By John Karolefski
At a time of ever-increasing costs, trade promotions need to change. Digital transformation of the trade promotion area is proving to save operational money and also increases sales. In fact, digital methods provide a model to allow for reduction in promotional costs, better promotion tracking, quantifiable return on investment (ROI), stronger shopper and consumer behavioral understanding, and improved retailer collaboration.
That’s the view of John Rossi of Wipro Technologies, a global consulting firm, speaking last week as the moderator of a panel discussion of trade promotions in a digital world at the annual Leadership Forum of the Grocery Manufacturers Association (GMA) in White Sulphur Springs, West Va.
“For years, the retailer was the center of the world of consumer goods manufacturers,” said Wipro’s General Manager and Global Head, Consumer Goods Consulting. “Not any longer. The consumer and shopper are sitting in the middle, and digital is a great way to get to them. Everything we do in our companies has to be reconsidered and retooled. Those that do this and are first movers are going to thrive. Those that don’t do this are probably going to die.”
He said sales and marketing, as well as all supply activities, must be built around the final consumer, not intermediate retailers.
This represents a substantial change of thinking, according to Rossi. It’s not about the CPG company or its network of suppliers and retailers. It’s all about the final consumer and innovation. In other words, what are CPG companies doing differently to find new ways, products and messages to reach the final consumer?
He pointed out that manufacturers historically could count on three possible promotional casuals: Price, Display, Feature/Coupon. In the current retail environment, for a single product there are now multiple price points and display locations that may exist within a single store, across stores, and virtual shelves.
“With the emergence of digital connections, manufacturers have many additional promotional touchpoints: social, manufacturer mobile app, account mobile app, and targeted shopper promotions,” he said. “If a manufacturer struggled previously to determine which touchpoint drove shopper decision, imagine how much more difficult it is now.”
He added that the benefits of direct-to-consumer promotions include the cost efficiencies associated with digital promotions and quantification of ROI related to digital trade promotions.
He explained a special benefit of going digital – potentially “reversing” slotting fees via mobile marketing. He gave the example of promoting the availability of a certain product on a mobile device. The manufacturer could ask a Walmart, Kroger, or 7-Eleven if they want to be the banner listed on the first screen.
“We have areas today that will change how we are going to be doing things,” Rossi said. “It’s not like anything we have done for the last 25 years. We have opportunities to connect with shoppers, opportunities to measure what promotions are doing on a granular level, opportunities to not spend trade dollars, and opportunities to have properly stocked shelves when we have an in-store experience.”
The linchpin of such changes is today’s Millennial consumer, who spends more than 2 hours a day on a mobile device.
“They are thinking differently and we have to start to reach out differently, especially when it comes to trade promotions,” said Rossi.
He listed several points about mobile marketing:
- The use of mobile shopping apps grew faster than any other category of apps. There has been a 174% increase for the shopping category.
- Eighty-five percent of consumer goods companies have mobile apps deployed; a quarter of them already have 10+ applications implemented.
- One of every two Millennials has downloaded a mobile shopping app.
- Mobile coupons are redeemed 10 times as often as traditional coupons.
“Mobile shopping and mobile coupons are very prevalent in that age group. I grew up in an industry with FSIs and ads. That’s not where this age group is,” said Rossi.
Global sales on mobile devices are expected to grow to over $280 billion, up from $150 billion in 2014.