Traditional marketing once focused largely on building awareness for a brand; today’s mantra is about changing consumer behavior. This is a daunting challenge for virtually every CPG brand because of lack of continuity across marketing channels, intensified confusion among shoppers, and the constantly evolving promotional landscape.
According to statistics published by AMG Strategic Advisors in a 2012 report, “The Trend Behind the Spend: A Study of Trade Promotion and Merchandising Spending in the Consumer Packaged Goods (CPG) Industry,” CPG companies allocate an average 13.7 percent of gross sales on trade funds.
During the 2015 CHPA Annual Executive Conference (AEC), panelists concurred that marketing dollars are proportioned differently in today’s rapidly changing environment than in past years. The typical marketing budget was defined as follows:
Increased focus is also being devoted to shopper marketing and client-specific strategies. With more sophisticated shopper loyalty data, improved big data analytics, and nearly immediate feedback mechanisms available through social media, CPG manufacturers are definitely paying attention and honing their messaging, marketing spend, and overall strategy.
An oft-overlooked strategy that can shape behavior – for the influencer and the consumer – is sampling. A majority of CPG manufacturers will not include this among their marketing tactics for two reasons: 1) it’s viewed as somewhat parochial and not very glitzy; and 2) it requires a disproportionate percentage of the marketing budget. However, according to consumer research conducted in 2007 by the Promotion Marketing Association’s Product Sampling Council, CPG manufacturers may be overlooking one of the most effective methods of reaching, influencing, and paving the path to purchase. Their report suggests that more than 60% of consumers favored product sampling as their preferred method of learning of a product and its effectiveness.
In addition to motivating consumer behavior, CPG manufacturers also face an uphill battle with retailers and distributors themselves. Launching new products is not for the faint of heart – the performance thresholds are high and the price of entry has increased sharply through the years. The AMG Strategic Advisers study also shared potential tactics to overcome the challenge of mounting slotting fees and increased SKU (stock keeping unit) scrutiny and rationalization to earn shelf space.
None of the marketing approaches outlined – including sampling – are short term fixes. They must be part of consistent and continual campaigns to attract new consumers to the brand franchise while inspiring existing users to remain loyal.
Based on the current economic situation facing retailers and manufacturers, the fragmentation of the retail marketplace, and the broadening reach of digital and shopper marketing options, understanding and prioritizing advertising and promotional spending has never been more crucial. However, there is one thing that is certain: yesterday’s promotional techniques will not perform as they once did.