As consumer packaged goods manufacturers seek to increase the ROI on the money they give retailers for promotions, loyalty programme funding may increase.
More than 90% of the money that retailers spend on advertising, marketing and promotions (AMP) comes from Consumer Packaged Goods (CPG) manufacturers, according to a new report from AMR Research. This cost has reached 27% of sales for CPG manufacturers, and they are keen to reduce it. This will mean that category managers and merchants in the CPG retail sector will receive less money and will be expected to achieve better results. Manufacturers want better returns on their AMP investments - at the moment returns run typically at 8-16%.
More for loyalty programmes
The authors of the report predict that retail customer loyalty programmes will receive more of each manufacturer's CPG consumer and trade promotion budgets - provided that they can achieve the manufacturers' category and consumer segment performance targets. Retailers who can do this will benefit from greater funding at the expense of the others.
The report defines the key AMP processes and applications that will help retailers retain or increase this funding. By interviewing more than 50 retailers, application vendors and consultants, AMR has developed a blueprint for these processes and applications.
· AMP management is now splintered, and cultural rifts impede change.
· Vendors are already delivering components that help AMP.
· The broad scope of AMP puts a premium on data, content and process integration, raising risks and (potentially) costs.
· Trade promotions will become more complex as brands shift focus from causal factors to results.
While early, trail-blazing adopters may find it difficult, they will gain in the long term over competitors who lag behind.