TRADE PROMOTIONS – CAN IT HELP ME WITH EXECUTION?
As many as 48 percent of companies struggled with their ability to improve their retail execution in 2021, POI found. * Trade Promotions is one of the most important tools that manufacturers in the CPG sector have at their disposal, with many companies turning to image intelligence solutions to see growth. One of the highest priorities for companies looking for an uplift in retail sales is to run promotions or discounts.
If we look at the definition of Trade Promotion, it is a planned marketing strategy aimed at increasing revenues by generating increased sales of individual products covered by the promotion and promoting new products and brands. This is closely related to convincing the customer to choose them at the expense of other brands and products previously purchased by the customer in addition to attracting more potential customers to the store.
There are many tools companies can use to encourage customers to buy promotional products, and these include, among others:
- Additional product displays (islands, extended shelves, shelf ends, displays next to cash registers and many others).
- Price promotions (products that are offered at a lower price, price discounts or deals offering higher sales value – ex. Buy One Get One Free).
Proper display of the promoted product plays a huge role during the promotion. When we talk about it, we should include two main components:
1. The placement of Point of Sale materials (POSM) – these include floor stickers, special racks, signs, banners, and posters, life-size display stands and demonstrations. These promote impulsive purchases, and their placement among bull’s eye zone shelves triggers impulse sales.
2. Placement of promoted products in additional expositions.
The difference between an optimal shelf and a non-optimal shelf can affect your sales volume by up to 10%. This says a lot about how important it is to choose the right display, but also to ensure its execution in the store. It is also crucial to properly display the correct promotional price tag.
Below is information relevant to understanding the importance of the topic:
- Annual CPG spend on trade promotions is $500 Billion worldwide (the second largest item in the P&L)**
- 59% of conducted commercial promotions in stores do not reach the break-even point***
- Reporting about the implementation of the promotion is ineffective, time-consuming and not in real time
- Out-of-shelf in the case of trade promotion is on average 15%
- Often the promotion cycle is very short
- To increase ROI on promotions, you need to quickly gather information from the market about their progress in order to react even during the promotion period
- Headquarters often does not know what the promotion looks like during its duration and the research, if done, flow ex-post and nothing can be done with such information.
- Promotions may require a mix of products on display as an element of promotion – how to quickly check if cross-categories are well displayed.
- There will be no break-even discussion without the perfect timing of the information campaign and promotion. For this reason, auditing the existence of a promotional display, within the first days of the promotional cycle, is very important and gives the manufacturer a chance to check existence, compliance and react to gaps/exceptions noticed
Unfortunately, most trade promotions fail in one form or another. However, CPG producers can minimize their loss of sales resulting from poor compliance with the promotion by using tools and technology to ensure perfect implementation of the objectives of the promotion.
Thanks to computer-vision solutions which are supported by neural networks, auditing the compliance of the promotional materials and products placed in a store, is an easy process. All you need, is a person in a store and five minutes to take photos and send them to the processing cluster.
StayinFront Digital developed tools enabling companies from the CPG sector to TPx based on Image Recognition Technology.
If you are interested to learn more about our solution, please contact us at email@example.com or toll-free at 1.800.422.4520.
*Source: “The State of TPx and Retail Execution for Global Consumer Goods and Retail”
**Source: “Forrester – Market Overview: Trade Promotion Management”
**Source: “Nielsen – Most Grocery Trade Promotion Lose Money for Suppliers”