Promotional inefficiencies will remain a problem
July 27, 2014
KANSAS CITY – During the past few weeks, as some of the leading publicly-traded food and beverage companies have announced their most recent earnings, there has been a lot of talk about promotional inefficiencies. Companies are not generating the same promotional “lift” as they once did when marketing products and the impact has been reflected in lower volume sales.
A common reason cited is increased competition at the retail level for display space. But the explanation simplifies a greater challenge facing the consumer packaged goods category, specifically the proliferation of new retail formats and the changes taking place in how consumers receive news and entertainment.
Increased choice in both areas has led to the fragmentation of the marketplace. It must be noted that convenience, dollar, club, supermarket and supercenter retail formats are all well established, and consumers appear content to divide their shopping trips between the venues that offer the value and product formats they require.
With regards to media consumption, the days when news and entertainment were primarily consumed via network television and newspapers are long gone. The marketplace is not just fragmented – It is shattered. The Internet and all of its byproducts, whether it is social media, apps or the ability to access the web via mobile devices, means delivering promotional messages to consumers that are noticed is becoming incredibly challenging. And this conversation does not take into account the emergence of devices and apps that may disable the delivery of a promotional message or allow viewers to skip over advertisements as they view entertainment.
A key to a successful promotion is staying in front of the consumer, whether it is with a physical end cap in a retail store or an advertisement. As these trends continue to evolve it is going to become more difficult to have direct or indirect promotional messages delivered.
The shifts taking place today are not industry specific -- They are cultural. Future success may require the redefining of a successful promotion or reconsidering how to attract a consumer’s attention. But a key takeaway from the shift currently taking place is it is going to continue and attracting the consumer’s attention is going to become more difficult.