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Dispelling the Myth of Manufacturer Promotions

The nature of the retail and vendor relationship is quickly changing. We are transitioning from an era where print ad was king into one centered on personalized, digital marketing. This shift represents a huge opportunity for retailers and vendors to provide more valuable partner promotions to their customers than ever before. Last week I joined a webinar from Deb Stambaugh and Global Market Development Center on “Dispelling the Myth: Retailer and Manufacturer Collaboration Is Too Hard.”

Stambaugh spent some time reviewing the trends currently impacting the retailer/manufacturer relationship. The industry has somewhat been shaped by early digital movers like Amazon and Zappos, customers now understand the benefit deep digital integration can provide and are beginning to expect it from all retailer interactions. There is a noticeable divide between digital first retailers (i.e. Amazon, Zappos, Warby Parker) and the brick and mortar then digital operations. The organizations who take the leap to adopt this change and integrate technology into every aspect of their brick and mortar operation are the ones poised for the greatest success. Smaller footprint stores have the most to gain from digital transformation. Understanding consumers and personalizing promotions allows stores to be more profitable per square foot and promotions to be more efficient.

Trade promotions have long been a force in the retail world. Every year ONE TRILLION DOLLARS is spent on trade globally or 15-20% of manufacturer revenue. However, out of those promotions, 67% do not provide positive ROI. Promotions in the past were designed and often repeated without the deep understanding of the consumer need we can gather with today’s big data capabilities. When designing promotions today we have the ability to use data available to learn about the audience, define their need, create as many potential solutions as possible, test those ideas, and learn from those tests.

While that process seems fairly straightforward, there are challenges to designing effective trade promotions. Stambaugh points to three challenges for successful trade promotions:

  • Confusion and chaos
    • Promotions are manual: It’s difficult to collect, compare, and negotiate promotions across suppliers
    • Last minute changes to ads/promotions
    • A lot of suppliers are excluded due to size and strategy needed to execute
  • Lack of visibility
    • Disparate data/multiple sources: Hard to create one source of truth
    • Excel based reporting: Not the optimal data analysis tool, resource intensive.
    • Analysis isn’t timely: Often not completed in time to adjust strategy
    • Lack of post-promotional effect understanding: What did the promotion really do for the brand?
  • Missed Opportunity
    • Automatically repeating anniversary promotions rather than learning to make them better
    • Not evaluating impact of changing variables
    • Retailers missing out on available funds
    • Suppliers not knowing if they are meeting goals

By leveraging advancing technology to understand consumer desires and trends coupled with digital platforms (email, social, website, CRM) retailers and manufacturers are better poised than ever to create powerful, meaningful promotions. The retailers who take advantage of the shifting digital landscape and bring value in store will be the big winners in the fight for not only trade dollars but also consumer.

Why do I work at AWG? “I chose to work at AWG because I want other people to love shopping local grocers as much as I do.” -Andrea