TRADE PROMOTION

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Is It Time to Re-Think Trade Management? 

By Mark Osborn

Trade promotions may be nearing an inflection point, one where the very nature of the practice itself - and the investments behind it - could fundamentally shift to new and different models for consumer engagement and promotion.

Why? Consider the following: Deloitte reports that consumers’ use of mobile devices influence $1 trillion, or roughly 28 percent, of all retail sales.  What’s more, a recent Google study revealed that 82 percent of smartphone users say they consult their phones on purchases they’re about to make in a store. The consultation could take many forms: looking up information on a brand’s website, checking consumer reviews, conversing with friends and family on social media, comparison shopping for better pricing, reviewing features or services with a competing retailer or online marketplace or a combination of these.

This connectivity is not only giving consumers substantially more power and control, but is also changing their behavior and their expectations. And companies that reach consumers with the right information, offers and experiences in moments of opportunity like these will have enormous opportunities to influence consumers’ decisions and choices.

Just as an example, the same study of smartphone users showed that 33 percent of consumers ended up purchasing from a company or a brand other than the one they originally intended because of information they received in a moment.

Direct-to-consumer engagements like these are increasingly becoming the norm, and could very likely shake up the promotional models that have been in place for the last 20 to 30 years.

As consumers connect with the internet, with each other and, increasingly, with things in the world around them, it’s possible that opportunities will shift away from large-scale promotions designed to prompt purchase and use that span every store and every consumer. Instead, opportunities will increasingly arrive as highly targeted, individualized interactions designed to influence ongoing engagement and brand experience.

Engaging Consumers, One at a Time

With that in mind, imagine the following scenario which is not only possible today, but already happening. A food company develops or partners with a third-party mobile app that delivers recipes for consumers based on their unique taste profiles. The app then generates an ingredient-based “shopping list” for the recipes the consumer chooses. When the consumer goes shopping, in-store beacons identify the consumer and connect with the app via his or her smartphone.

Leveraging the information available via the shopping list on the app and the consumer’s profile, both the CP company and retailer have an opportunity to engage the consumer as an individual, based on their flavor preferences and the recipes they’ve chosen. Using that information, the CP company and retailer can deliver customized offers or information in the moment directly to the consumer’s smartphone - making the consumer feel that the experience was tailored just for him or her.

This approach also gives CP companies the opportunity to learn directly about consumer behavior, preferences and activity triggers. They can use this information to fine tune future engagements, and measure ROI far more effectively and on a more granular level than ever would be possible with traditional trade promotions. And they can accomplish all of this with none of the heavy, up-front investment and questionable ROI of today’s typical promotions.

Pay Less, Get More?

While trade promotions remain the norm today and continue to represent significant areas of emphasis and spend for CP companies, the question is whether or not examples like these are trade promotions at all. Is it a trade expense? A marketing expense? Both?  Neither?

And if CP companies and retailers ultimately determine it’s more effective, less expensive and more engaging to reach consumers with personalized interactions like these rather than large-scale generic promotions, how will the practice of trade management evolve and transform over the next few years as technologies and opportunities for consumer engagements continue to improve and mature?

What do you think? What will trade management look like in the new digital economy? Are changes like these already happening in your company? Let us know. We’d love to hear from you!

Mark Osborn is VP, Digital Strategy & Business Planning for SAP Consumer Products Industry Business Solutions.

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