Do you know the value of your promotions and whether they are reaching their intended target consumers?
Most every CPG company runs promotions but are they always effective? Most are not!
CPG manufacturers run promotions to increase brand awareness, increase foot traffic, support retailers, drive sales, reward loyal customers, and to load consumer’s pantries (pantry loading is the stockpiling of an item by the consumer taking them out of the market for a while so that they don’t shop competitive items)
Less than half of all promotions are effective. Most brands promote their products without a clear strategy to grow sales and increase brand awareness. While it’s important to support key retailers, a promotion that doesn’t increase sales and foot traffic in the category is simply a waste of money. Brands need to set clear objectives and focus their promotional strategy around those goals.
When planning a promotion you need to carefully think about all of the factors involved, including:
Menu cost (ROTO, etc)
Fixed cost (promotional fees and merchandising costs)
Bill-back/shipments – case rate (reduced case cost – cases sold)
Miscellaneous cost (other)
Off-invoice – case rate (reduced case cost – cases sold)
Scan down rate per unit (amount paid to reduce the item price)