The economic slowdown has not been kind to branded foods and consumer packaged goods (CPG)s. Popular brands have lost market share to less expensive private label offerings. To win back market share and retail shelf space, CPG vendors are increasingly outsourcing their sales and marketing needs to outside agencies.
Robert Hill, president of Acosta Sales and Marketing told Supermarket News that agencies typically provide 4 services:
- Headquarter sales calls – making calls to win new accounts and shelf space
- In-store retail support – improving product displays and operating product sampling events
- Marketing support – increasing in-store marketing as part of the media mix
- Customer support – improving relationships between retailers and vendors
Agencies typically forge links between manufacturers and grocery stores. Lately, agencies are also reaching out to other retail formats including convenience stores and drug stores. The goal of these business relationships is primarily to sell more product. But agencies can encounter problems when retailers want to sell more of their own private label product. In some cases, the agencies collaborate with retailers and “work store brands into meal-solution promotions involving branded product.” The agencies also provide sales data and metrics to retailers to help them understand the mindset of today’s shoppers. Everyone agrees that consumers are watching their budgets more closely than ever before. Agencies are playing a key role in cutting costs for CPG vendors and in improving the relationship between retailers and marketers. Going forward, vendor use of outside agencies is expected to grow.[Source: Hamstra, Mark. Outsourcing Is In. SupermarketNews.com. 30 Aug. 2010. Web. 9 Sept. 2010]