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Top If you like our site, please bookmark it so it will be easy to find later. MARKETING RELATED ARTICLES
TRADE PROMOTION SPENDING UP 17.3 PERCENT IN 2003 SLOTTING FEES CAUSE RETAILERS TO FOCUS ON BUYING, NOT SELLING MARKETERS MUST UNDERSTANDING CUSTOMER VALUE E-COMMERCE PROVIDES BENEFITS AND AN EXPANDED MARKETPLACE EVALUATING THE SUCCESS OF A PROMOTION THE KEYS FOR SUCCESS IN E-BUSINESS HOW TO EVALUATE THE SUCCESS OF TRADE SPENDING EVALUATING THE EFFECTIVENESS OF SAMPLING DEVELOPING
A PROMOTIONAL TIE-IN WHICH PROMOTION VEHICLES SHOULD I USE IN MY MARKETING STRATEGY ELECTRONIC MARKETING IN THE AGE OF TECHNOLOGY UTILIZING THE BENEFITS OF SCANNER DATA
REBATE & PREMIUM FULFILLMENT ARTICLES FREQUENT SHOPPER & RETAILER ARTICLES
According to Alternative & Innovative Marketing, the multicultural population (consisting of African American, Asian and Hispanic’s) in the U.S. is expected to reach 239 million by 2050 (54% of the U.S. population) and is one of the most attractive emerging market opportunities for marketers.
AIM, a multicultural business strategy and integrated marketing solutions firm, presented the survey findings at CMS’s 2008 Promotions Logistics Forum in September. The survey consisted of answers from manufacturer’s (71%) and distributors, retailers and others making up the remaining 29%.
While there has been rapid growth among U.S. ethnic groups, the majority of survey respondents (67%) indicated a limited to fair understanding of multicultural consumers. This is despite the fact that over half of the respondents indicated that these consumers account for over 20% of their customers. According the survey, companies simply don’t have the infrastructure or resources to properly target this growing consumer base.
When asked what percentage of the company’s annual marketing budget is spent to
targett multicultural consumers, 48% of respondents indicated that less than 10% of their budget is allocated to the
effort while over 30% of companies have allocated no portion of their budget to the cause.
Staff Restrictions
Over 50% of the respondents indicated that they have no dedicated staff within their organization focused on multicultural efforts. Only 15% of the companies have divisions whose purpose is to find ways to target the multicultural consumer. Reaching the Multicultural Consumer A growing number of companies are implementing strategies to address and target these consumers. The most popular strategy is to change the product packaging, mostly by making them bilingual in English and Spanish, although image and color changes could also take place. Only 11% indicated using a comprehensive, integrated approach to this market while nearly 40% flatly noted they were doing nothing.
The survey results point to an important customer base not being fully targeted and significant opportunities to grow brands being overlooked. With an expectation that the multicultural population will continue to grow at a tremendous pace, companies cannot afford to continue this approach. And while a more marketers are increasing their efforts to reach multicultural consumers, the most effective promotional plans are those that have been thoroughly researched and tested, as one tactic will not suffice to reach all these consumers. For more information, you should go www.couponinfonow.com which is an excellent source for information and research regarding coupon promotions.
TRADE PROMOTION SPENDING UP 17.3 PERCENT IN 2003 Retailers and manufacturers have argued for years over trade promotional spending. Cannondale Associates 10th annual survey of trade promotion practices found that the situation seems to have gotten worse. The survey found that trade promotional spending is on the increase, both as a percentage of gross sales (17.3%in 2003, up from 14% in 1999) and as a percentage of total marketing spending (54% in 2003, up from 49% in 1996). Manufacturers are concerned that they are spending more on trade promotions every year, that it’s taking over their marketing budgets and retailers are worried that they are not getting their fair share of promotional dollars. What manufacturers want to do is build their brands while the retailers want to build category sales and store loyalty. But while both sides have begun using tactical tools designed to measure the efficiency of promotions, most of the efforts have focused on the margins of the problem. The report states, ‘‘trade promotions have simply been about dollars spent and cases moved this week. There has been little or no focus on getting the right consumers to change their purchase behaviors to build the brand and category loyalty over the long term.’’ Retail consolidation and a weak economy are putting pressure on manufacturers and Wal-Mart’s expansion is putting pressure on retailers. There are retailers who continue to treat trade spending as a profit center. Cannondale’s survey also identified the companies seen by their partners as doing the best job with trade promotional spending. When retailers were asked to rank the suppliers with the best strategic vision, execution and capabilities with regard to trade promotion, for example, Procter& Gamble Co. and Kraft Foods emerged as the leaders. When manufacturer’s ranked retailers on their use of trade promotion dollars, Wal-Mart Stores Inc. was the clear leader. H.E.Butt, Publix, Kroger, Safeway, Target, Meijer Inc., Albertsons, Walgreen’s, Ahold USA, and Wegmans Food Markets completed the top ten.
SLOTTING FEES CAUSE RETAILERS TO FOCUS ON BUYING, NOT SELLING Retailers are focusing on buying, not selling as there are a lot of new brand items are making it onto the grocery shelves to improve short-term financial gains by generating slotting fees, free goods and promotion spending. This will result in longer-term affects such as reduced category profits, slower turns on best sellers and irreconcilable consumer dissatisfaction. If not carefully planned, many of these new items will degrade overall category performance. Out-of-stock rates on the best selling items go up because a) there is less shelf space, and b) there are more SKUs to manage/replenish. Retailers in the present purchasing environment are almost always going to take the guaranteed cash up front rather than waiting to see if they can sell more product later. Many new items don't represent a price position consistent with the needs of the category. The category sales and gross profit dollars don't expand unless the item brings a new user to the category, or trades the consumer up to a more profitable item. A new item might cause the consumer to switch purchases from another item already in the category, but often at a lower or equal margin. If all an item does is match an existing item, you'll have the same amount of sales, but have used twice as much space. A new item offering no valuable point-of-difference often has poor turns and the items only sell any significant volume when on promotion and the category ends up trading down to a less valuable option. A retailer should add new items when it brings in new consumers or encourages those already purchasing from the category to trade-up or increase consumption. A new item should produce incrementally increased volume and/or differentiation for the retailer. The job of the category manager should include having in stock the right assortment of items and that pricing is fundamental to creating a positive shopping experience for consumers. There is a set amount of funding available for any given item. When it is used for "slotting fees," it minimizes the amount of trade used for price, advertising, co-marketing/consumer activity, etc. Not only do items with slotting squeeze valid items, but also valid items are not on the shelves because they haven't got enough slotting attached. As long as slotting fees are available, the retailers will take them, if not demand them and as long as suppliers continue to pay them, they will continue to be demanded. It has very little if anything to do with product presentation at retail that is designed to satisfy the needs of the ultimate consumer.
The objective of the Marketing Mix Model is to effectively increase sales by measuring every element of the marketing mix. Scanner data provides a clear relationship between price and sales. Test Marketing
Use consumer promotions to:
Marketing is focused on “Outputs” not “Outcomes”. We measure attitudes, but it is behaviors that count (What the customer actually did). The objective of marketing is financial “making money”. Value brand marketing is the future value of current marketing activities.
1. Determine your customer’s financial value by:
2.
Define the current and historical value of your customers by group or
segment. 3. Utilize a closed loop marketing system.
Analyze Competition by Brand Quantitative evaluation of key measures including:
Analyze Customers by Brand Evaluate Drivers of Choice
Analyze Customers Purchase Behavior
Marketers must understand the customer’s value. Companies spend millions trying to understand consumers purchasing behaviors, promote loyalty among high-value customers and influencing consumer’s to try their brands or encourage them to purchase more. Marketers must recognize what influences the attitudes and changing needs of their loyal customers by developing targeted promotions. By measuring the value of your customers, you can also identify the high-value ones and take the appropriate steps to keep them from defecting. By understanding what makes customers loyal, and combining that knowledge with data on current spending patterns, companies can develop loyalty profiles. The first step toward understanding what your customer’s value, companies can use their existing market research. Once you understand the elements that its customer’s value, you then can take step to build on those values and correct any weaknesses. Companies can develop a promotional strategy that can be tailored to specific segments and a company can first target it most valuable customers. This approach not only reduces the chance they will switch but also encourages them to consolidate their spending in order to go on receiving benefits. A company’s loyalty profile helps it target its spending more effectively. By using a coordinated approach to understanding the many facets of loyalty and by tailoring tactics appropriately, marketers can build a loyal customer base for their brand. Marketing promotions are changing due to several factors including media fragmentation, trade consolidations, product proliferation, changing consumer behaviors, lifestyles and demographics. In-store marketing has increased as consumers, on average, spend only 22 minutes per store visit. According to a study of 50,000 purchases, two-thirds of consumer brand purchase decisions are made in the store. In-store advertising provides a direct message where the consumers buying decisions are made. There are a number of in-store advertising vehicles that can provide a broad range of communications from imagery and product information to price discounts. Creative messages should be clear, simple and relevant. Multiple ideas or elements confuse consumers, therefore you should try to deliver a single point that will deliver a consistent impression of your product. A single, clear message enables the consumer to recognize the key element in your message instantly. You should include only elements such as product name essential for communications, minimize clutter, and use bright, contrasting colors to stand out and capture the customer’s attention. In-store advertisement should be readable from 10 feet away, therefore you should use bold, large, legible type. Identify distinct benefits and encourage the consumer to buy now. A strong, short, direct message with simple graphs are the most legible to deliver your product image. In-store advertising should be part of your marketing mix and is a valuable complement to your other marketing vehicles.
MARKETERS MUST UNDERSTANDING CUSTOMER VALUE Companies spend millions trying to understand consumers purchasing behaviors, promote loyalty among high-value customers and influencing consumer’s to try their brands or encourage them to purchase more. Marketers must recognize what influences the attitudes and changing needs of their loyal customers by developing targeted promotions. By measuring the value of your customers, you can also identify the high-value ones and take the appropriate steps to keep them from defecting. By understanding what makes customers loyal, and combining that knowledge with data on current spending patterns, companies can develop loyalty profiles. The first step toward understanding what your customer’s value, companies can use their existing market research. Once you understand the elements that its customer’s value, you then can take step to build on those values and correct any weaknesses. Companies can develop a promotional strategy that can be tailored to specific segments and a company can first target it most valuable customers. This approach not only reduces the chance they will switch but also encourages them to consolidate their spending in order to go on receiving benefits. A company’s loyalty profile helps it target its spending more effectively. By using a coordinated approach to understanding the many facets of loyalty and by tailoring tactics appropriately, marketers can build a loyal customer base for their brand.
E-COMMERCE PROVIDES BENEFITS AND AN EXPANDED MARKETPLACE Forrester Research predicts that business-to-business e-commerce will reach $1.5 trillion by 2005, the Yankee Group says $5 trillion by 2004 and the Gartner Group predicts that the volume of global B2B e-commerce will reach $7.29 trillion by 2004. Whoever you believe, the revenue forecast is impressive. The focus has moved from e-commerce (buying and selling over a digital medium) to establishing electronically integrated front and back-office applications. The Internet will shift work away from time consuming tasks and improve the execution of routine processes such as financial transactions, transportation management, procurement and fulfillment as well as reduce their costs. Managers will be more productive and spend their time finding better suppliers and negotiating better prices, delivery and quality. I believe that e-commerce is the key to purchasing goods more efficiently, including the reduction in transaction costs, time, errors, logistics and controlling inventory. Category management can focus on increasing sales instead of purchasing. The benefits of e-commerce include but are limited to:
The four dimensions of e-business include transactive, touch point, reward and knowledge management.
To assure success, a company's commitment to an e-business initiative needs to be strong and clear in its e-business leadership, roles and responsibilities, cross-functional interdependencies, budget matters, and management structure. First, you must have a clear, well-coordinated starting point and then align and educate your leadership and management teams. A lack of alignment on strategic direction can be fatal to an e-initiative, because it increases difficulties in making decisions, implementing change, and working across existing functional, geographical, and company boundaries. This does not happen without clear aligned commitment from the top. Second, establish a cross-functional project team. Project teams are the most effective way to get things done. Focus on a single objective without having to balance other daily activities. There must be clear communication of shared goals. Integrating e-procurement can streamline purchasing, reduce transaction cost, and inventory requirements and reduces delivery time for goods and services. Trading exchanges are online portals that streamline order and supply processes securely. E-procurement allows companies to eliminate multiple errors and reduces the time that it takes to get price quotes. The system would generate an electronic purchase order and send it to the supplier selected that would then transmit price, availability and delivery information to the purchaser via email. The supplier then ships the order and an electronic delivery confirmation and invoice to the purchaser who compares the invoice with their purchase order who verifies and approves the invoice for payment.
A brand must have one consistent image that will be remembered by the consumer. Your visuals should be clear and relevant and grab the reader's attention. They should communicate the benefit of the product to the consumer. Every brand is different and your objective is to distinguish your brand from the competition. The following are keys to brand development:
Brand managers should work with their
advertising agency in the development of their marketing strategy, providing
available demographic information and establishing a direction for creative
advertisements including layout, visuals and the headline. The headline should
be clear and readable and the text easy to read. The visuals should dramatize
the offer, benefit and brand message. The marketer should then determine if the
communication executes well with the brand strategy.
EVALUATING THE SUCCESS OF A PROMOTION How do I determine which marketing programs are successful? Determining which marketing programs, either retail or manufacturer initiated is working can be evaluated in a number of ways dependent on your point of view. Many manufacturers measure success on the basis of sales. However, only by understanding which marketing programs generate the best Return-On-Investment (ROI) can they increase effectiveness and generate profitable sell-through. Many retailers evaluate manufacturers on how well they tie into existing retailer-initiated programs (which generally serve as their profit centers). Knowing what will produce the highest mutual Return-On-Investment will enable manufacturers to recommend more effective ways to invest trade-marketing dollars. A process called Effective Marketing Performance systematically integrates retailer, manufacturer and market data to first measure sell through related to specific marketing programs, and then analyzes their Return-On-Investment. It enables manufacturers and their retail accounts to quantify which trade programs are working, where and why. PDI research indicated that there was a 35% short-term return on your marketing investment in coupon, trade and media promotions. Incremental volume predominantly comes from coupon redeemers. PDI research also revealed that:
Focus on individual consumer buying behavior will provide depth. By adopting a more bottom-line approach and new measurement tools, manufacturers can quantify both the sell-through and Return-On-Investment of their trade marketing programs. As a result, trading partners can maximize profitable growth in the future.
THE KEYS FOR SUCCESS IN E-BUSINESS The Internet is changing the way companies do business with their customers, with their distribution channels and with their suppliers. Electronic commerce represents a new, more efficient channel to communicate with customers, make sales and reach new markets. E-business is constantly evolving and adapting to their experiences and new technologies. The keys for success in e-business is understanding your customers, focusing on customer services and making the Internet channel an integrated part of your overall business strategy, creating an end-to-end integrated technical infrastructure. To succeed on the Internet, it must be a strategic part of your business. An Internet presence and the expanded relationship with customers have become a necessity. Consumers expect to be able to buy at any time of day at their own convenience. They expect instant access to information for purchase decisions, including specifications, prices and availability. They expect to be able to place and track their orders and choose how to purchase; by phone, Internet, email, fax or in person at brick and mortar stores and to receive 24 hour customer service. There are distinct business opportunities that can be realized with an effective e-commerce initiative such as attracting new customers, a one-to-one relationship with your customers and cost savings. The Internet offers the ability to interact with your customers. The primary opportunity in e-commerce is the revenue potential from an expanded loyal customer base. In addition to an end-to-end business process, systems must be integrated to enable companies to have a single view of all interactions with their customers. Merchandisers who are trying to deliver personalized offers to web visitors are unlikely to have an integrated view of web behavior and actual purchase history, especially when those purchases are made from multiple points, such as the web, phone, catalog and brick and mortar store. It is essential to have a complete view of the customer, including electronic purchases, phone purchases, order and credit history, returns and marketing offers. It is the best way to create a personalized marketing program. Exceptional customer service should be a primary objective along with focusing the company around specific product lines or channels. The key advantages to using an e-store as a framework with which to address the critical challenges are:
TEN KEYS TO E-BUSINESS
HOW TO EVALUATE THE SUCCESS OF TRADE SPENDING The availability of scanner data has provided tools to measure trade spending like "Return on Investment (ROI) or Lift. Measurements need to address controllable variables such as promoted price, vehicle types, consumption cycles and frequency.
While there is no single measurement to address all situations, marketers can use a combination of measurement tolls to develop promotion optimization.
EVALUATING THE EFFECTIVENESS OF SAMPLING The time to evaluate the effectiveness of a sampling program for a new product introduction is during the planning stages. Sampling consistently is ranked the "most effective" tactic for gaining trial. Sampling programs are being redefined by sophisticated targeting techniques, improved profiling and more efficient distribution methods. Marketer’s must gain trial to stay competitive with the broad range of new products that continually enter the market. Marketer’s require a system to verify and measure the effectiveness of their programs. Below are some guidelines to follow to measure the effectiveness of a product launch
A product sampling program will impact the rate of trial purchases. Effective advertising and promotion will result in a stable level of trial purchases and an effective sample program will speed up this process. New technologies, targeting methods and an increase in the number of products entering the marketplace has made sampling a more powerful and widely used tool. Brand managers are using sampling not only for new product introductions, but as product reinforcement strategies that accompany traditional advertising media. There has been a shift away from mass sampling to a more targeted approach utilizing advanced targeted methodologies, resulting in more money being spent in the right market and building equity by communicating with consumers. A targeted program drives brand awareness because it is integrated and leveraged. It is very important to target consumers at the right time and place such as implementing a new baby program in hospitals by providing new mothers with free samples of baby products or products for small children delivered to parents picking up their children at child care centers If you are a brand manager who is interested in sampling, the following guidelines are recommended:
Try to match the models or demonstrators with the profile of the brand. Customizing sampling personnel according to the event. Approximately 25% of sampling programs use models. Sampling is a good way to increase product awareness, but it has to be well-executed, thought-out and supported. Some sampling companies can assist in targeting consumers, print materials, conduct mailings, orchestrate events and track responses. Another alternative is to create membership based programs that integrate sampling. The Internet has the ability to build one-to-one relationships with customers. Approximately 75% of brand managers budgets are promotional and they need to track consumer conversions.
DEVELOPING A PROMOTIONAL TIE-IN Developing a tie-in promotion is a three-step process. First, the marketer’s must develop a plan based on the unique strengths of a lead product. Second, he must identify those products which would compliment and reinforce the theme and third, those products marketer’s must be convinced to participate. There are least eight benefits that tie-in participants can expect and should look for in a dynamic tie-in promotion.
The following are some guidelines to consider for Tie-in promotions:
KEYS IN DEVELOPING YOUR PROMOTIONAL MARKETING MIX Santella & Associates recommends
that
you use the following keys in developing your Promotional Programs Marketing Mix: 3. Evaluate the opportunity for sales or performance increase and its value in profits; 4. Establish the cost or percentage of incremental sales that you will need to invest; 5. Review the successful promotions that you have used in he past. Can these promotions be used again successfully? Evaluate the strengths and weaknesses of your product; 6. Identify who can assist you in reaching your goals and objectives. Determine who will be involved and what their specific responsibilities will be in the promotional program; 7. Decide what you will budget for your promotional strategy. How will the budget affect incremental sales? Will your budget be determined by a percentage of sales? 8. Determine how you will measure the results of your promotional strategy. Decide when the promotion will begin and what the duration of the promotion will be. Be sure that you communicate your decisions with all the relevant personnel involved. Make sure that everyone is on the same track; 9. Make sure that all promotions are reviewed by your legal departments in order to determine if any problems exist; and 10. Complete a post promotion evaluation of your promotional strategy. What worked and what problems did you have with the promotion. Use this evaluation for assisting in planning promotions in the future.
Maintaining and promoting brand recognition is the major issue facing companies that have been involved mergers and acquisitions. These mergers and acquisitions are being driven by the current economic trends and the reduction of return on their investments. Due to these consolidations, marketers must redesign and develop new promotional strategies to build up brand recognition and loyalty. They must use an integrated marketing strategy that integrates their product with the consumer on a one-to-one basis through targeted marketing vehicles. Identifying and understanding who your customers are is the first step toward success. Marketers will need to know and understand their product categories, how the industry operates and how changes will impact their brands. There will continue to be an increase in targeting promotions and electronic marketing. How marketer's will use these new vehicles to promote their product or brand, as well as use the information that these vehicle, will provide will be a key factor in determining the success .
WHICH PROMOTION VEHICLES SHOULD I USE IN MY MARKETING STRATEGY The choices that you make in determining what
promotion vehicles to use and their timing to advertise your product can be very
difficult and time consuming. Product introductions involve communicating to almost
all of your organization's salespeople, middlemen, consumers, service and production
employees. The challenge is to promote trial by consumers, get the trade to stock or
sell the product, and stimulate the sales force and virtually everyone else in the
company. The following are ten of the most basic promotion vehicles, their
strengths and their weaknesses: There are over 500,000 ways to combine these promotions and that's not including the variations in the copy and layouts that can be used. A combination of promotion vehicles often provide the best results. For example, a couponing program would likely get higher redemption rates and increased trial if the ad includes an entry for a sweepstakes. The key is to get all the elements of your promotional strategy to work together which requires a thorough understanding of the marketing vehicles available to the brand manager. 1. Coupons - You can use a coupon to increase incremental sales, promote trial, reduce inventory, maintain current customer base against competitive activity or to reach a large consumer base economically. The method of distribution can significantly affect the redemption rate of the coupon as well as the costs. There are a number of variables such as face value, circulation, market share, method of distribution, expiration dates, etc. that can affect the results of this promotion vehicle. 2. Rebates - Provide assistance to the retailer in moving product inventory as well as promotes trade relations. Rebates provide your sales force with incentives for displays and reinforce brand loyalty. Historically, rebates do not generate product trial and are not overly popular with consumers because of purchase requirements and their results are difficult to measure. 3. In-ad (In-store) Coupons - This promotion vehicle is useful if your goal is to increase trial on a geographical basis or to receive cooperation from a retailer with shelf displays and price features. Reduction of trade inventories on a market-by market basis and trade relations (the store gives the deal, not the brand) also make this a useful promotion vehicle. It is difficult to budget and the opportunity for misredemption is increased. A coupon allowance may be agreed upon with the retailer to avoid budgeting problems. In this case, the coupon processing and handling fees could be saved as the coupons would not have to be processed, however, the manufacturer would not receive the marketing information from this promotion. In-Store coupons have proven to be among the most effective at influencing customer purchase behavior. In the 1950's, over 70% of brand decisions are made outside the store. Today, with brand loyalty averaging only 24% (according to American Demographics), over 70% of brand decisions are made inside the store. This has resulted due to time pressures on the consumer and the increasing number of marketing vehicles outside the store. It combines the power of a coupon with the targetability of the in-store environment. The quality of redemption increase to 9.3%, because in-store coupons capitalize on shopper impulse and target efficiency. 4. Direct Mail
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Distributing coupons and samples via direct mail provides a number of features such as: Control - Direct Mail allows the advertiser to control other elements such as timing, geographic distribution, test marketing and deliverability; Personalization - Direct Mail allows advertiser to take advantage of inter-activity with your target audience; and Fraud Detection - Direct
mail reduces waste, misredemption and fraud. 5. Sampling - This promotion vehicle is excellent for introducing a new product, product improvement or for entering new market areas with an established product. In the past, cigarette manufacturers have found this vehicle very useful. Sampling, however, is expensive and lacks precision. Sampling is probably the most dramatic, and costly way to get your product into the hands of new prospects. Target you giveaway effort to people most likely to buy, or many of your costly samples will end up in the trash. It is the most effective way to get someone to try your product and subsequently buy the product. 6. Sweepstakes - This vehicle increases readership of your advertisement and can enhance product image. This can also assist in building a customer database. It will not promote new trial and can be very expensive. There are several legal restrictions and requirements that must be followed. 7. Bonus Packs - This is a good technique for increasing product movement at the point-of-sale. It supports brand image but does not promote new trial users. 8. In/On Pack Coupons - These coupons give the consumer a greater perception of value then FSI coupons. Properly used, they can increase new trial, retain present customers and extend the advertising base and image of the product or brand at the point-of-sale. The weakness of this promotion vehicle is that there is an opportunity for increased misredemption. 9. Electronic Discounts - This is an excellent vehicle to identify who receives the discount and the face value of the discount. For example, with Catalina Marketing's Checkout Coupon, a consumer who purchases Pepsi could receive a coupon for a free Coke in order to promote trial and increase market share. A consumer who purchases Coke could receive a 25 cent coupon off on their next purchase of Coke to reinforce brand image as well as promote customer loyalty. This vehicle will not affect the consumer's decision to purchase prior to entering the store or at the point-of-sale, but will impact the consumer's buying decisions of future visits. 10. Trade Allowances - This is the costs of getting display price features, increased shelf space, gaining distribution in the market place, etc. Use trade allowances to get a new product into distribution. The weakness is that they are often abused by the retailer as agreed upon conditions such as display features are not fulfilled. 11. Internet Promotions - This is a new promotion vehicle that will continue to grow as more consumers access the internet. Many manufacturer's already have web sites to promote their products by providing consumers with recipes, product information, direct mail offers, etc. Couponing on the internet is limited in the grocery industry at the present time due to the potential misredemption issues. Promotional discounts can be offered to the consumer via the internet where the discount is electronically given by the retailer through the use of their Frequent Shopper Card. We believe that there will be increased growth in this promotion vehicle over the next two years as consumers are able to access the internet faster using cable networks. Since coupons' entrance on the internet, there have been several companies formed that provide an assortment of choices for coupon distribution and advertising including requesting traditional coupons via-email, direct mail or printing coupons directly from the internet. The internet has the potential to increase brand exposure, generate richer consumer databases and provide excellent targeting opportunities. The internet allows you to target your promotion and provide specialized offers that are customer specific. The internet will continue to grow and consumers will continue to enjoy its use, including receiving new rewards and promotions. Interactivity is what differentiates this medium as it engages the consumer, allows you to personalize the offer and provides one on one communication. Today, the average supermarket has 18,000 brands vs. 8,000 in 1970, with 30,000 stock keeping units (SKU's) vs. 12,000. Couponing succeeds at persuading the consumers to purchase you product. In conclusion, your decision on which promotion vehicle to use has to be based on your marketing goals and objectives as well as the product itself and your marketing budget. You will most likely determine that a combination of promotion vehicles carefully timed will provide you with the best results.
ELECTRONIC MARKETING IN THE AGE OF TECHNOLOGY "Electronic Marketing" consists of technological innovations commonly having other applications such as kiosks, frequent shopper programs, checkout coupons etc. Electronic Marketing is comprised of three components: 1) Creating customer identified data; 2) Collecting the data; and 3) Developing that data into useful information. The customer identified data includes the customer's ID number, their names and addresses and their purchases captured electronically at point-of-sale. The ability to create customer identified data is primarily obtained through check cashing data and Frequent Shopper Programs. This also requires sophisticated technology that can manage large amounts of data on a household basis, collect and clean the data, store it so it can be accessed easily and develop it into a useable format that can maintain an accurate name and address file. For example, a store creates about one megabyte of household purchase data per day. Therefore, a 100 store chain creates about 365 gigabytes of data per year or the equivalent of about 180 desktop computers. The primary benefits of Electronic Marketing are identifying your best customers, their purchase behaviors and the ability to market more effectively. This information allows you to increase sales and profits by targeting specific promotions to specific households based on who they are and what they buy. Electronic Marketing allows you to utilize your promotional budget more efficiently. Cost effectiveness is achieved by delivering the right offer to a household based on what they purchase. It is most effective when it is viewed as a continuous process. It should not be a one time promotion as it is the continuous, measurable nature of this marketing tool that separates it from traditional marketing methods. Results can be measured, both in terms of redemption and sales. The results can be evaluated and the strategy refined for future promotions. Electronic Marketing programs can address both long and short-term objectives. One of the principles of electronic marketing is to find the most cost-effective offer to achieve your goals by balancing the value offered, the purchase requirements and the likely redemption rates. In summary, the key benefits of Electronic Marketing are that you can identify who your customers are, reach them on an individual basis, is cost-effective and is difficult for your competition to track and respond to.
UTILIZING THE BENEFITS OF SCANNER DATA The data that can be obtained by scanning barcodes is beneficial only after the data is analyzed and transformed into useful information. This information can be useful to the manufacturer's brand manager as well as the retailer. Projections based on scanner data frequently form the basis for product decisions such as promotion, advertising, inventory control and pricing. At the present time, approximately 63% of the typical marketing budget is allocated to promotions. Manufacturers utilize scanner data projections to assist in measuring the incremental impact of pricing and promotions and affects their strategies for allocating budgets and determining their prices, advertising and promotional plans. Since the 1980s, companies have developed projections based on a 10 - 20% sample of scanner tracking data of the sales in a marketing area to determine total sales. However, a single sample of stores in a market can only be used at the national category levels. It cannot be used to accurately project the product and store differences where more specific level information is required, such as at the brand level for a particular chain. Scanner data obtained from the majority of stores in a market would provide timely information that would reflect short-term marketing decisions such as displays, in-store advertising, pricing etc. This approach provides measures that are stable over time and provide an opportunity to report data on a local market level. At the major retailer level, direct-product-profitability (DPP) is identified. Manufacturers as well as retailers focus on target marketing techniques that address the individual products within a retail market. For the retailer, the benefits of scanner
data include: For the manufacturer, the benefits include: Scanner data allows the manufacturer to monitor and evaluate performance by brand and/or division, determine marketing budgets, develop forecasts and identify strategic marketing opportunities.
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