CG Manufacturers Seek New Trade Promotion Channels with Retail Partners

Consumer goods (CG) manufacturers face a challenging market. Retailers partner with them in some cases, but also compete with their private label products. And, consumers want more information when they’re making purchases which can lead to a doubled-​edge marketing sword.

To address these issues from a marketing perspective, CG enterprises will focus on optimizing their trade promotion management. Compared to previous years, more CG manufacturers are automating their trade promotion practices in 2012.

Over half, 58%, of marketers that participated in a recent Consumer Goods Today survey believe that the promotional lift they receive from trade spending is ‘debatable’. At the same time, 52% of these vendors say they have measurement tools in place to assess their efforts. These vendors clearly hope to improve their trade promotion performance. This year, 43% are working with retail partners to design more effective promotions. In 32% of these cases, vendors are turning to new formats like coupon websites, mobile and social.

Some analysts have encouraged CG manufacturers to cultivate consumer relationships with respect to branded products. The growing popularity of private label products is prompting manufacturers to increase innovation in branded products (63%) and boost collaboration with retailers when going to market (37%). But compared to last year, promotional efforts are changing. CG manufacturers are lowering their involvement in 2 categories as the following numbers show. The 2011 percentages appear in parentheses:

  • Using social media 26% (44%)
  • Increasing trade promotion budget 7% (13%)

Analysts did not directly address why CG marketers are backing away from social media. The survey found that most CG manufacturers do not wish to sell directly to customers and aren't actively engaged in social business. But they realize they need to connect directly with the consumer in general. As a result, social media is still a work in progress for many of these businesses.

Going forward, media companies may be able to increase sales by offering platforms that allow manufacturers to easily work with retailers to improve promotions. Showing a definitive lift from these investments, in both traditional and digital channels will be key.

[Source: 2012 Sales and Marketing Report. Consumer Goods Technology. 2012. Web. 20 Jun. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.