Tuesday, June 29, 2010

Be Brand Selfish

The idea of “information sharing” and collaborative planning became popular in the CPG industry during the 1990’s. The Category Management promise was that if you help retailers grow their categories, as the category leader, you create a unique opportunity to grow your own brands. While true for the early adopters, the competitive advantages were short lived. As manufacturer after manufacturer hopped aboard the category management bandwagon, category insights became cheap commodities. A retailer can ask any manufacturer and get the same information. Multiple sources of reliable information was available from the trade.

While retailers got smarter it came at the manufacturer's expense. Working collaboratively with manufacturers, retailers had greater visibility into manufacturer brand plans and strategies, long term objectives, and short term promotions and pricing. Category insights gleaned by retailers were used to grow their own private label and house brands. AC Nielsen is reporting that private label brands surpassed $86 billion last year, up $14 billion since 2007. Sharing information also has an unintended consequence. Confidential plans often ended up in the wrong hands. Manufacturers with close retailer relationships had easy access to their competitors plans.

So can manufacturers slow the growth of the private label monster they helped to create? Probably not. But they can certainly stop feeding the beast and let it hunt for food on its own. Now is the time to be brand selfish and be more discrete about what and how information is shared with trade partners.

While information about categories, consumers and trends can be valuable in closing a sale, it should be used for just that purpose, closing the sale. Any extraneous information, detailed research or facts that can be used to grow the category or private label should not be shared. It becomes a distraction and potential liability.

Information is an asset that should be guarded with more caution. This includes an internal information governance process and educating the sales force in what is permissible to share with the trade and what is not. Information gatekeepers should work with the brand teams to distill valuable information and insights down to key sales points. This means that instead of publishing binders of elaborate business plans and useless data that show the retailer how smart you are, an information guru creates a few sales sheets with relevant facts and data to support the customer sale. Designating a point person mitigates the risk that proprietary information gets released.

By managing your brands and not the entire category, you are doing yourself a big favor. Let the other manufacturers worry about the category; your number one priority is to manage your brands. Be more brand selfish.

Monday, June 28, 2010

Money Down The Drain

Woo-hoo. Wanna make a splash with consumers? Develop a mail-in sweepstakes offer and promote it via a national FSI or develop an in-store promotion where customers can enter a drawing at the store. Consumers will get excited about winning a vacation cruise, a Wii video game player, an iPod Touch or other fabulous prizes. This is good for the brand because the contest builds consumer excitement and the halo effect of the contest builds brand equity over time. Does this sound all too familiar?

A few years ago I ventured into a Target store in Fountain Valley, CA. I just happened to pop in to look around the store with nothing to buy. The drawing for the Target Red Vespa scooter immediately caught my eye so I stuffed my entry into the box and and left the store. A few months later I received a phone call. It was the Target Store congratulating me as the winner of a brand spankin‘ new red Vespa scooter. I vaguely remembered placing my entry and to this day have no idea who sponsored the contest.

My Vespa story is a real life example of what happens all the time. The reality is that contests and sweepstakes are a total waste of money and do nothing to build brand excitement or loyalty.

In all my years working with brands and promotions, I cannot think of one consumer sweepstakes that did anything to increase product sales. Brand groups never talked to each other and each made the same mistake over and over. As a sales rep, we would put entry boxes at the store and they would go missing by the time we had to pick them up. There was never enough lead time to hit all the stores and the buyers at the main office hated contests. One buyer made a comment that I will always remember. He said, “why can’t you create promotions where everybody wins?... contests create winners and losers and customers resent that.” It did not occur to me until years later how right this buyer was.

I saw a disturbing pattern with contests and sweepstakes. I’m talking about the contest winners. None of the winners ever bought or used our products! Since contests or sweepstakes by law don’t require a product purchase, savvy professional contest entrants would "game" the system. It's a lot easier to win one of these contests than the average person realizes. There’s an organized movement of professional contest entrants who actually do know this and share information about contests in newsletters, message boards and through affinity groups like Yahoo! Groups. Hundreds or perhaps thousands of people who enter every single contest they encounter in order to win prizes.
 By stuffing the entry boxes these winners have made a lucrative hobby out of unsuspecting CPG companies.