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Each month I write a feature for Media Post:CPG, an integrated publishing and content company whose mission is to provide a complete array of resources for media, marketing and advertising professionals. This article first appeared on Media Post: CPG in December 2014.

Article Link (http://www.mediapost.com/publications/article/239868/re-examining-trade-and-consumer-marketing-in-a-con.html)

Consumers are voting at an accelerated rate for brands that enable customization.

McDonald’s just announced that it would address a downturn in same store sales by giving a large group of stores the ability to customize menu items to individual tastes. McDonald’s is reacting to the much higher growth of fast casual restaurant concepts like Chipotle and Subway — places that enable customers to customize their meals from a broad list of ingredients.

The same is true for the way in which people consume content. Consumers are gobbling up devices that let them customize what they view on TV — Roku, Apple TV, Amazon Fire TV. These streaming devices allow consumers to unplug from a bundled, you-get-what-we-serve world to a just-what-I-want world. Look out, Comcast.

What’s the implication for CPG — the industry Warhol spotlighted as the poster child for mass production with his Campbell’s Tomato Soup cans and Brillo boxes?

I’m an ad guy, so I’m not about to tackle the logistics of mass customization of consumer products. But I will suggest that CPG marketers must accelerate customization of the marketing communications for those products. And in CPG, that shift begins with Trade, where some two-thirds of all marketing spending continues to go.

Trade Promotion Management is quintessentially “push” marketing. The majority of it is built on the assumption that a target consumer arrives at a store still wide open to discounting and couponing that will affect last-minute brand purchase behavior. And assuming a fickle and pliable consumer, the marketing that pushes a deal closest to the point of purchase today receives the lion’s share of CPG spending.

So, a few key issues with that model today:

1. Consumers are much less open to being influenced by promotions at store. With technology enabling consumers to do lots of easy pre-store research, and the economic downturn teaching consumers to be disciplined about sticking to a list, CPG marketers should take a much harder look at what they are spending to influence in store behavior.

2. Incremental purchase has always been a myth. A large part of Trade spending continues to be used to do what no marketing ever effectively does — get the consumer to buy just one more time in a given cycle or shopping occasion. Various research has proven, I think most effectively presented by Prof. Byron Sharp’sHow Brands Grow, that the only factor that truly differentiates the #1 brand in a category and lets say, the #8 brand in the category, is the number of customers who buy it. The fact is, the number of times consumers shop the brands in any category is virtually the same across all brands in the category, and the units purchased per shopping occasion doesn’t differ at all across a categories’ brands. So the only thing a marketer should focus any kind of spending on (Trade or Consumer) is getting more people to try the brand. Trade dollars spent toward trial are smart. Trade dollars spent on frequency of purchase or buy rate, are throwing money down the drain.

What should a CPG marketer do to avoid getting caught short (like a McDonald’s or Comcast) in a consumer-controlled world?

  • Follow the consumer. Shift Consumer spending from push media (e.g., broadcast) to consumer-controlled digital and mobile media.
  • Follow the consumer. Shift spending (probably faster than you’re doing now) to more pre-store (less Trade and more Consumer) media. If you’ve got Trade dollars targeted toward affecting repeat purchase, move those to trial creation, where they can actually do some good.

One more thing. Up your creative game. The only person deciding whether your content is worth viewing today is, yep, you guessed it, the consumer.

Michael Bollinger
Michael Bollinger
President

With over 25 years in the advertising agency business, Michael is focused on building the consumer package goods agency of the future - today. One centered on the breakthrough brand storytelling skills of Smith Brothers' creative heritage, but delivered with the speed, efficiency and real-time optimization demanded by today's digital environment.

Michael joined Smith Brothers in 2005 as Director of Client Services, after spending the previous 20 years with DDB Worldwide where he was Senior Vice President, Group Account Director of the global agency's flagship, Chicago office.

Excited by Smith Brothers' creative firepower and entrepreneurial spirit, Michael joined the Smith Brothers’ team with a vision for delivering big agency resources on a dramatically more nimble and effective platform.

Under Michael's leadership the agency acquired digital agency, Hot Hand Interactive, in 2007. It added its Social Media practice in 2008. Developed an Analytics practice in 2009 and a Shopper Marketing practice in 2010.

Layered onto its existing strategic planning, creative and media capabilities, Smith Brothers is now a force in the CPG marketing world – working with brands like Nestle, Del Monte, Heinz, Ghirardelli, Red Bull, and more.

Michael holds a B.A. in English from Union College.