Embed Size (px)
Citation preview
Personalized Offers: The Cure for Tired, Ineffective Promotions
Dr. Sean Coary, Saint Joseph’s UniversityGraeme McVie, Precima
Graeme McVie
VP & GM
Business Development
Precima
Sean Coary
Assistant Professor of
Food Marketing
Saint Joseph’s University
Today’s presenters
CONFIDENTIAL 2
The Present State of Trade Promotions
and Why It Needs to Change
Why Are Personalized Offers Both
Better and the Wave of the Future?
So What Should I Do?
Trade
Promotions
Personalized
Offers
Looking
Forward
01
02
03
Today’s discussion topics
CONFIDENTIAL 3
“You’re Special”
CONFIDENTIAL 4
“You’re Special”
CONFIDENTIAL 5
“You’re Special”
CONFIDENTIAL 6
Treat Me Like I’m Special
• Consumers have a desire to feel special
• Are we filling that need?
• Traditional trade promotions • Generic - For the masses
• Is this mass, generic approach optimal?
CONFIDENTIAL 7
Manufacturers: Are You Satisfied?
CONFIDENTIAL 8
Manufacturers: Are You Satisfied?
CONFIDENTIAL 9
State of Trade Promotions
• 66% of trade promotions do not break even
• 22% did not generate any sales lift
• Who suffers?• Manufacturers – Sunk cost?
• Retailers – Opportunity cost?
CONFIDENTIAL 10
What Do We Do?
CONFIDENTIAL 11
Compliance: Trust and Execution
Manufacturers have issues with putting together a good plan but not getting retailers to execute it as agreed upon.
CONFIDENTIAL 12
Greed or Logistics?
• Trade promotions can be complicated
• Analytics and evaluation of trade promotions• Struggle for both manufacturers and retailers
• Analytical tools and personnel issues
• Leads to “copy and repeat”
CONFIDENTIAL 13
Challenges Finding Qualified Personnel
Manufacturers have challenges finding qualified personnel who can use and understand existing solutions.
CONFIDENTIAL 14
There Has to Be a Better Way?
• Traditional trade promotions aren’t working well
• Coordination and personnel issues
• Follow the consumer
CONFIDENTIAL 15
Who Wants What?
CONFIDENTIAL 16
How Do We Do It?
CONFIDENTIAL 17
Looking Forward:
So What Should I Do?
03
CONFIDENTIAL 18
How should retailers and manufacturers
address these issues?
Stop Fix Slant
Relevance Incrementality Scale
CONFIDENTIAL 19
Heavy Promo
Promo at Right Time
Promote Less
Do Not Promote
How did my items in the weekly ad
perform?
Which promotions should I continue
executing and which should I stop?
StopStop non-performing promotions;
perform post-promotion analyses
CONFIDENTIAL 20
-60%
-40%
-20%
0%
20%
40%
60%
0% 10% 20% 30% 40% 50%
Revenue
Gross
Profits
% Lift
Impact of Different Discounts on Volume, Revenue & Profit
Volume
At 30%: Revenue turns negative
Discount
At 40%: overall Volume begins to level-off; Gross Profits have turned
negative
FixFix promotion mechanics to
improve performance
CONFIDENTIAL 21
Maintain for Overall Category Value
Maximize Promo Investment
Fix or StopMaintain for Best Customer Value
Value to Best Customers
Val
ue
to O
vera
ll C
ateg
ory
High
Low
HighLow
Coffee Example
Design promotions for loyal
shoppersSlant
Private label ground coffee
CONFIDENTIAL 22
$0
$3,000
$6,000
$9,000
$12,000
0% 10% 20% 30% 40% 50%$0
$3,000
$6,000
$9,000
$12,000
0% 10% 20% 30% 40% 50%
Low Value Customers
Secondary Customers
Priority Customers
At 40%: overall revenue begins to decrease
Sales $’s
Sales $’s at Different Discount Depths Overall and by Segment
All Customers
At 30%: priority customer revenue starts decreasing; low value customer
revenue increases
Discount
Discounts should be designed for
loyal shoppersSlant
CONFIDENTIAL 23
I have offers Which customers?
For this customer What content/offers?
Strategy, Process &
Analytics shift from
“limited offer bank” &
rules management…
…to ”total store offer
bank” and customer
level optimisation
Personalization efforts need to
evolveRelevance
CONFIDENTIAL 24
Price
All $1.9990% of Shoppers
Volume Sales GP$’s Delivery
Shelf
10% of Shoppers
Price
$1.89
$1.85
$1.95
$1.80
$1.75
$1.80
$1.65
$1.69
$1.79
$1.89
Delivery
app
paper
app
app
paper
app
Current Value
Potential Value
Intent
high low Defend & retain
high med Retain & grow
med high Grow
high low Defend & retain
high low Defend & retain
high med Retain & grow
med high Grow
high low Defend & retain
med high Grow
high low Defend & retain
+2.2% +2.3% +1.4%
Personalized pricing is possible Relevance
CONFIDENTIAL 25
How do I identify offers for each customer
that drive response and incremental sales?
How do I incorporate customer-driven
offers into the personalization process?
Thank You
Incremental Sales (Cross Sell/Up Sell)
Improve Category Penetration
Support Brand Objectives
Total Spend and Frequency
Driving both relevance and
profitability is essentialIncremental
CONFIDENTIAL 26
IncrementalOffer optimization delivers 100%
personalized prices/offers
CONFIDENTIAL 27
$5 off when you
spend more than $100
Offer Bank Content & Channel Bank
Paper
Web
Each individual customer receives 100% personalized communication:
‒Content (Creative and Copy)
‒Offers (products, discounts, spend stretch levels, rewards, etc.)
‒Offer type combinations (Thank You, Basket Builder/Continuity, Up/Cross Sell, etc.)
‒Channel of delivery (paper, digital, mobile, social)
Need to build scalability into
funding and process
Shoppers
CPG Trade Promotions
CPG Consumer
PromotionsCPG Media
Retailer Catman Team
Agencies
TV, Print, etc…
3rd Party Partners
FSIs, Coupons,
etc…
In-store Trade
Promotions
Retailer Marketing
Team
Retailer Personalized
Offers
CPG Sales Team
Scale
CONFIDENTIAL 28
Supplier Collaboration
MerchandisingShopper
Marketing
Loyalty Programs
1-1.5X 2-3X 4-6X 5-8XROI
Collaboration delivers significant
personalization benefitsScale
CONFIDENTIAL 29
Stop non-performing promotions
Fix promotion mechanics
Design trade promotions for loyal shoppers
PromotionsA
Deliver personalized prices and personalized offers
to key shoppersPersonalizationB
Design scalable collaboration processes
Provide sufficient funding to drive significant sales
impact from personalization
ScalabilityC
Personalization delivers but needs
to be scalable
CONFIDENTIAL 30
Q&A
https://www.precima.com/content/poi-personalized-offers-the-cure-for-tired-ineffective-promotions
CONFIDENTIAL 31
Graeme McVieVP & GM of Business Development
Precima
(301) 652-0694
@GraemeMcVie
@Precima
Sean CoaryAssistant Professor of Food Marketing
Saint Joseph’s University
(610) 660-2275
@ saintjosephs
Thank you for attending
CONFIDENTIAL 32
Personalized Offers: The Cure for Tired, Ineffective Promotions
Dr. Sean Coary, Saint Joseph’s UniversityGraeme McVie, Precima
