The Devil’s in the Data: Why Optimizing In-Store Marketing Spend is Critical to CPG and Retail Success

In this special guest feature, John Weller, Chief Knowledge Officer and Co-Founder of T-Pro Solutions, discusses how in-store marketers can optimize the data from their spreadsheets and use key analytics to stay ahead of industry trends. John has over 28 years of experience designing and implementing trade promotion management solutions for numerous Fortune 500 CPG companies in the United States and Canada. Additionally, he has over 100 TPM/TPO projects implemented in over 60 CPG product categories. John’s vast experience includes 21 years with the Synectics Group holding positions of project manager, Director of Client Services and SVP of Client Services and 2 years as President/Founder of Tourmalet Consulting Group. LLC.

Today’s shoppers enter a store armed with information about price and ways to reduce it. There are entire websites dedicated to help minimize consumer expense through promotional pricing and coupons. In some cases, consumers can actually receive money back. This largely undermines the CPG manufacturer’s goals of enticing buying decisions to push volume and drive revenue with marketing strategy.

More data less understanding

Much of this confusion lies in the fact that there are more drivers swaying buying decisions than ever before. At one time, it was simply in-store merchandising and price that drove people to buy, which was all available through a retailer’s POS data. Even with this great depth of data reflecting a small set of measures, manufacturers continuously struggle to perform timely post-event analysis to quantify promotional performance.

Today, in-store promotions, digital coupons and FSIs are all initiatives that impact buying decisions. While the tactical variety to influence a consumer is empowering, this creates a breadth of disparate data silos that makes managing the investment in these programs more challenging.

Can today’s manufacturer tell the end price to consumers after all marketing events?

Frighteningly, most CPG companies cannot.

Trade + Consumer = ROI

To understand the true ROI of an in-store promotion, manufacturers must acknowledge that both trade marketing and consumer marketing impact buying decisions. This means that sales, in-store marketing and brand marketing must coordinate to avoid the unintended layering that results in lost profitability.  To do this, companies must have the ability to turn data collection into analytical insights.  Only then can manufacturers make informed decisions and effectively coordinate their promotional activities.

Such insights may dictate staggering consumer marketing events or lessening the discount of a temporary price reduction. These data-driven collaborations will fuel more informed planning decisions, and with the help of predictive modeling, these teams can hone in on optimized pricing and merchandising to maximize the results of their promotional investment.  Instead of each group working in a vacuum, companies can jointly target optimal retail prices and decide which mix of consumers and discounts will be the most effective in achieving the desired goals.  With the proper data and tools, companies should use constraint-based modeling to target the optimal marketing mix.

Overcoming data hurdles with help

While many CPG companies manage data associated with the traditional syndicated POS sources, few have yet been able to manage the breadth of data required to get a holistic view of total in-store promotional investment.  Integrating and harmonizing new data sources has proven to be both challenging and time consuming.  Disparate data sources, customer alignment, product alignment and impact timing are just a few of the challenges that analysts face when trying to refine this data.

To combat these data obstacles, CPG companies should create a centralized intelligence hub for comprehensive post-event analysis and future event planning/optimization through advanced analytics. With this in mind, CPG organizations can comprehensively analyze and plan their promotional strategies.

The path to profitability                                                                                                               

With the significant combined trade and consumer marketing investment made by CPG companies, the practice of spending without accountability or predictability is not sustainable. The industry is already seeing CPG companies increasing the scrutiny of marketing investment to eliminate costs without a defined return. It is critical that companies harness the data available and turn it into usable strategy to make intelligent marketing decisions and maximize results.