CPG Trade Promotion, Co-op Ads Shifting to Digital in 2012
Consumer goods companies continue to pour money into trade promotion to boost sales. The typical company spends between 11% and 30% on the effort. These budgets are divided between trade marketing and consumer marketing. In 2012, the latest research suggests that consumer goods companies will increase their digital consumer promotions significantly.
Many of these promotions require manufacturers to work with their retail partners but these two entities do not always agree on which shopper marketing strategies are most effective. Manufacturers say the following strategies are most effective for driving sales and brand loyalty. Retailer percentages appear in parentheses:
- Iconic brand with strong equity among shoppers 50% (22.4%)
- Solutions-based content 15.6% (17.6%)
- Special packaging, promotions, ancillary displays 11.9% (22.2%)
- Behind the scene collaboration 8.7% (19.5%)
- Brand marketing platform 6.9% (6.7%)
- Other 6.9% (11.6%)
In the past year, CPG companies have also upped their mobile marketing investment with 35% rolling out scanable QR codes and 21% deploying mobile sites.
This year, about 71% of marketing executives at CPG firms expect to see an increase in their budget for digital promotions and 35.6% see the most potential in mobile coupons. Currently, 30% drop coupons at least once a month on the Facebook platform.
Many CPG firms say they’ve shared online co-op advertising with WalMart (25%), Target (26%), SuperValu (11%) and Sam’s Club (11%), among others. In addition, branded showcases on retailer websites or paid display ads on retailer websites are popular. But CPG companies aren’t giving up on traditional shopper marketing. Over 25% invest in co-op FSIs with major retail partners like WalMart, Target, Kroger and Safeway. Traditional circulars, in-store displays and media ads and direct mail remain key ways for CPG firms to partner with retailers.
At the same time, CPG companies are mindful that their retail partners are also trying to boost sales of store brands. About 60% of CPG firms with revenue below $100 million are calling this market change a moderate threat. To maintain sales levels and market share, CPG firms are taking the following steps:
- Product innovation 44.7%
- Collaborative marketing that promotes private and branded products 27.9%
- More path to purchase advertising TV, print, digital 17.3%
- In-store marketing 7.2%
- Lower prices 2.9%
“Digital’s becoming a very efficient way to partner with retailers because everybody’s already in the game,” says Wendy Warus, VP of Winning In-Store Team at Henkel.[Source: Applebaum, Michael. Path to Purchase Institute. Shopper Marketing Institute.com. January 2012]