CPG Marketing Communications Must Respect the Retail Environment


cpg marketing communicationsWhen you ask your friend who just made a new purchase, “Why did you buy that?” their answer is generally the result of effective marketing communication. They may respond with features and benefits, pricing and value, or reputation and accolades. These are all part of marketing communication.

What is marketing? The American Marketing Association defines marketing as, “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” In other words, it’s the plan to sell stuff properly communicated.

And, how do you define communication? Google’s first definition is “the imparting or exchange of information or news.” So, marketing communications is simply the transmittal of compelling information to sell stuff. But the marketing plan to make the sale doesn’t necessarily work by itself. The marketing plan needs to be executed by the salespeople. This is especially true in the CPG space.

Marketing communications must be tailored to the market conditions in order to be effective. Let’s define market to get a better understanding of this multifaceted process:

  • The “market” may refer to the demand for certain goods and services, like “there is an increasing demand for healthy beverages.” In this context, the reference “market” describes a potential number of interested customers.
  • The “market” may refer to the region where particular goods and services may be sold. When consumer product companies expand their geographic footprint, they are “expanding into a new market.” This is a new physical territory where their products will be available for the first time.
  • The “market” may also refer to a particular retail store, chain store, or big-box store where the producer’s products may be sold, as in, “Walmart is a great market for that product.” The regional and store definition of market may also be called “the marketplace.”
  • Online platforms such as Amazon may also be referred to as a market, such as, “Amazon is a good market to get started with that product.”

Here are some types of marketing communication:

  • Press. Solicit and acquire press on your branded products. It’s most effective if you write the review for the author. This is also the most inexpensive form of marketing communication and is favored by savvy startups. After your review appears in print or online, it’s up to you to disseminate it to all your buyers, prospects, and customers.
  • Awards. Enter as many contests as you can and when you win disseminate that information as you would favorable press and think about how you can get those awards and medals to the shelf, or better yet on your products in the retail store.
  • Endorsements. Try to get popular public figures to endorse your branded products. Include these endorsements in your marketing materials.
  • Comparisons. Compare your value to other competing brands in your category. This comparison may include price, quantity, quality, guarantee, ease of use, awards, and so on. Charts and graphs demonstrating your superior value are very effective in the retail marketplace.
  • Features and Benefits. Describe the distinguishing features of your branded products and the benefits your consumers will realize by using them. These should make their way into your marketing materials.

cpg marketing communicationsSome other methods for getting the word out include websites, landing pages, online marketing campaigns, social media advertising, webinar platform selling, billboard display advertising, television commercials, radio commercials, online videos, point-of-purchase marketing materials, signage, packaging, labeling, word-of-mouth, and telephone relationship selling.

Although CPG brand builders can sell their products online, most prefer to sell them in a physical marketplace. This is the place where their product can be discovered for the first time as a notion or impulse buy. This is very unlikely to happen online.

The physical retail store is the only place where customers can see value by comparing products to competitors’ products with actual tactile handling. Online sales tend to be exclusively a race to the bottom price-wise. The physical marketplace is also the only place where CPG producers can maximize their distribution and achieve quantity purchases which can help their cash flow and ultimately reduce their supply costs. But it’s not easy to gain access to the physical market.

Shelf space is limited. Big corporations monopolize the sets (the shelf plans that assign locations to categories, products, and brands). Still, according to the US Department of Commerce, 90% of retail sales continue to take place in bricks and mortar retail stores. Difficult as it is, CPG brand builders want to sell, or are already selling, in the physical retail marketplace.

The most effective place to use marketing communications in the retail store is at the point of purchase. It is the only place where the customer, the money, your product, and the decision to buy all come together.

And with that marketplace comes several severe limitations to marketing communications: limited space, poor lighting, undesirable shelf placement, limited attention span, limited inventory, and a plethora of competing signs and messages.

Marketing communications within this extremely limited environment come down to these few effective methods:

  • Temporary Price Reductions. Negotiate limited time discounting with the retail store to demonstrate value for money. Due to the limited space available for other types of merchandising materials, a price reduction is still the most effective form of marketing communication. This form of promotion may offer increased quantity for the same price such as, “two for the price of one,” and so on.
  • Co-Promotions. Working with another branded product outside of your category can be extremely effective in creating awareness for your branded products. Both brands in a copromotion benefit by introducing their brand to the following of the other brand. Both brands can demonstrate added value to the consumer.
  • Seasonal Advertising. The retail sales year is made up of 7 to 10 selling seasons, each one ending on a particular holiday or the weekend following the holiday. For instance, the 4th of July selling season begins the day after Memorial Day. When you produce colorful display materials celebrating the selling season, you are more likely to get floor displays and other preferential treatment since the store wants to create a fun customer experience that changes with the seasons.
  • Loyalty Programs. These may include coupons, receipt mail-ins, or store club participation. This is a way to reward your repeat customers and gain new ones. This type of promotion requires little, if any, space on the shelf. These discounts and copromotion coupons may be available through your website or some other online service that sends the coupon directly to the shopper’s phone.
  • Shelf Signage. This form of advertising is extremely effective, but it is limited usually to under 10 square inches and can be knocked off easily by shoppers, the competition, or a new store manager who wants “the clean look.” This is why your merchandiser needs to visit the stores where your CPG products are being sold on a regular basis.
  • Package Signage. Tags that hang on your products and labels that provide compelling information are also very effective, especially if they are installed on the production line. This form of marketing communication will always make it to the shelf. Medals, awards, and accolades fit well in this very limited format and they validate the customers’ purchase.

So in effect, marketing is the process of communicating compelling information in methods and in formats that support sales. But it is not sales itself. Marketing creates programs and materials that will be used by the salespeople in the marketplace. The question is, “How effective are those programs and materials?” Another question may be, “Are those programs and materials appropriate or counterproductive?” And lastly, “Do the salespeople use the materials the marketing people have designed, or do they design their own that are specific to their markets?”

Most people who pursue marketing careers never asked these questions. Why? Because most companies are organized in a top-down pyramid structure which puts marketing above sales. We know salespeople who were so disappointed with their company’s marketing materials that they created their own and put them up in their stores. We have seen literally tons of expensive marketing materials thrown into dumpsters on a monthly basis at distributing companies throughout the country. We often wondered if the folks who created those materials knew of their fate.

The top-down pyramid structure is a hangover from the early days of the Industrial Revolution when large companies controlled raw materials and charged their R&D people with creating products that would use those raw materials. Then they charged their marketing people with developing a plan and materials to promote the sales of those products. Finally, they handed those plans and materials down to the salespeople and charged them with executing the marketing plan and making sales. And if sales were bad, you guessed it, the salespeople were the first to go!

Even today, when sales are down, the marketing people will blame the salespeople. But when sales are up, the marketing people will take a bow! Funny how that is…

But when companies are founded, they’re typically made up of two or three entrepreneurs in a garage, rollup, or laundry room. There is no question in the minds of those founders that they must make sales in order to survive. For them, sales is on top, and marketing supports sales. These small startup companies do not have the luxury to do things any differently.

They ask their salespeople what they need in order to make a sale. They ask them regularly about the limitations of the marketplace. They ask them about what the competition is doing. They ask them about what programs and signage is working and what is not. They ask them what’s needed, what’s missing, and how can they help. The company’s very existence depends on a clear line of communication between sales, marketing, and production. Nothing happens without sales, not even salaries for marketing people!

cpg marketing communicationsSo, marketing should be working for sales and not the other way around. Ideally, marketing people should meet with the salespeople at least once a quarter to find out how they can improve their programs and materials. They should also meet on a regular basis with the customer service people to find out what the consumers are saying about their products, packaging, signage, programs, display advertising, and effectiveness.

Marketing careers seem to be put on a pedestal these days. It’s as if a clever piece of artwork or a compelling catchphrase could make all the difference in the sales of the CPG branded product. Without sales and distribution, all that creative effort is for not because it simply won’t be out there to be seen!

The marketplace is very fluid and changes radically from year to year. Programs and signage that worked last year may not work next year. Programs and signage that worked in one geographic market may not work in others. Who is the first to know about these changes? Your salespeople! Most of them don’t get paid whether or not a sale is made. Most of them are dependent to at least some degree on commissions! They have a vested interest in seeing sales happen.

Most marketing people get paid whether or not a sale is made. They seem to be in an ivory tower, isolated and insulated from the frays of the marketplace. They may even look down on the salespeople. After all, they’re working in the headquarters with the CEO and all of the important administrative staff. The salespeople are “out in the field.” This creates a physical, if not status, separation.

Marketing will spend tens of thousands of dollars on focus groups and other studies when their salespeople may already know the answers. We have worked with companies whose marketing people told us that their salaries were based on how much money they spent last year, and to reduce that budget could actually affect their salaries. Imagine paying marketing people based on how much they spend, and not on how many sales were made? Seems counterproductive to us.

This is why we are firm believers in what we call the Two-Division Company. Whether they know it or not, all companies basically only have two divisions: sales and sales support. Everyone who is not in sales or customer service is in sales support. This includes top management, administration, production, R&D, and marketing! Just like the startups in the garage, their job is to find out what salespeople need and create it for them.

To be effective, CPG marketing communication must respect the retail environment. Your salespeople are the key to keeping your products current and your marketing communication timely and effective. After all, you want your consumers to say, “I get it!”