63 Percent of CPG Manufacturers are Unable to Optimize Pricing, Trade Allocations and Go-to Market Strategies, the Promotion Optimization Institute Finds

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The annual POI State of the Industry report found that traditional CPG manufacturers need to transform their enterprises to drive efficiency, effectiveness and profitability

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POI research reflects that CPG leadership can no longer use historical practices to grow a profitable business due to industry paradigm shifts. Retailer and manufacturer operating models were not built to handle today’s industry complexity.

The Promotion Optimization Institute (POI), the leading resource for trade marketing and merchandising executives, today released the fifth annual “POI State of the Industry Report”. The POI found that 63 percent of CPG manufacturers surveyed reported that their headquarters support team do not have the necessary capabilities required to optimize pricing, trade allocations and go-to-market strategies. The report also found that 82 percent of manufacturers reported continued challenges with retailers sharing foundation data - point of sale, daily, and shopper– with them.

The annual POI 2020 State of the Industry Report focuses on the intersection of the people, processes and technologies required to be a suitable collaboration partner in the promotion and distribution of consumer products. This report utilizes the data and insights from the POI 2019 Trade Promotion and Retail Execution Survey executed in late 2019 of over 100 leading consumer goods manufacturers. The 2020 POI report shifts away from relaying tactical implementation tips as it did in prior years to providing strategic leadership focal points.

“POI research reflects that CPG leadership can no longer use historical practices to grow a profitable business due to industry paradigm shifts. Retailer and manufacturer operating models were not built to handle today’s industry complexity,” said Pam Brown, Chief Commercial Officer, POI. “New digital savvy brands are typically less matrixed, more agile, and many are taking share from larger retailers and manufacturers. As a result, new strategy needs to be created and executed in order to compete in today’s omni-channel retail environment. This report was written to serve as a guide to support CPG manufacturer’s transformation in 2020.”

Additional Key Findings and Recommendations:

  • Syndicated data is critical for manufacturers. Ninety-seven percent of companies reported that syndicated data is their largest data source with 90% reporting that POS data is the most often utilized. In addition, 21% reported they are using direct-to-consumer (DTC) while the use of sell in data while still high at 64% has dropped 12 points compared to 2018.
  • Data quality issues continue to plague manufacturers. Sixty-seven percent of companies reported having data quality issues with external sources and data anomalies that, when left unfixed, can lead to inaccurate analysis results.
  • Revenue Growth Management (RGM) is growing in popularity. 75 percent of companies surveyed have initiated RGM with 46% advancing practices, diving deeper optimized promotion, pricing, and pack growth analysis; 35% adding tools or analytical capabilities to support new RGM processes; and 28% adding RGM personnel.
  • Trade Promotion, Planning and Optimization (TPx) solutions bring transformative results to CPG manufacturers. According to respondents, TPx helped eliminate poor performance (56%), led to process improvements (52%), and provided greater visibility to the business and opportunities/risks (50%).
  • Retail execution of aligned promotions is improving, yet needs to be accelerated. POI research reflects that companies continue to struggle with compliance and in-store execution. Sixty-one percent of respondents reported that their companies are struggling to have retailer aligned promotions executed at store level. Seventy-nine percent that they don’t have the tools needed to make appropriate decisions at store level.
  • CPG manufacturers have substantial digital needs that need to be addresses. Fifty-four percent of respondents noted that developing a digital practice starts with gaining necessary digital budgets. Twenty-seven percent reported a need for a dedicated digital team, and 30% reflect a need for dedicated analysts. In addition, 57% said that in order to understand the potential, impact, and ROI of digital enablement the team needs digital ROI evaluation capabilities (55%).
  • Artificial Intelligence (AI) allows CPGs and retailers to gather customer insights in an automated fashion and predict next actions based on previous patterns or images. Twenty-three percent of respondents note that their organizations are working to enable AI capabilities in the TPx promotion cycle while 15% of the respondents are already working to incorporate AI capabilities to impact retail execution.

“POI’s manufacturer and retailer members continue to express their renewed sense of urgency when innovating and continuously improving. From the critical content and insights to the feedback from POI members, this is by far the greatest, and most applicable report published by POI,” said Michael Kantor, CEO and Founder, POI.

The 2020 POI State of the Industry Report is available today for download at https://poinstitute.com/about/poi-publications/

About the Promotion Optimization Institute
POI brings together manufacturers, retailers, solution providers, analysts, academics and other industry leaders. Members of the POI share cross-functional best practices in both structured and informal settings. Additionally, members benefit through our industry alliances, the Certified Collaborative Marketer (CCM) ™ curriculum and certification, global industry leadership events, and the Promotional Collaborative Capability Matrix (PCCM). POI aims to instill a financial and metrics-based discipline not typically found with other trade groups.

The goal of our innovative approach is collaborative promotion optimization. The focus is on the customer/shopper through sales, marketing, and merchandising strategies. POI is based in Wyckoff, New Jersey. To learn more about the POI, including how to participate in research, how to register to attend or sponsor events, and how to engage with leaders on the CCM, visit http://www.poinstitute.com/ or email Mkantor (at) P-O-I (dot) com.

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Theresa Smith
POI
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