The Trend Behind the Spend:
A Study of Trade Promotion and Merchandising Spending
in the Consumer Packaged Goods (CPG) Industry
The Trend Behind the Spend reveals insights into today’s CPG trade promotion and shopper marketing spending
environment, including a look into the future and how key tactics are changing the retail landscape. AMG Strategic
Advisors studied and assessed the trade spending of more than 200 CPG company clients to create this critical and
comprehensive report. The full findings include 750+ unique response sets on topics ranging from pricing analysis
and slotting tactics to spending priorities and retailer performance. The results include actionable steps for maximizing
marketing budgets, gaining competitive advantage and exploiting trends.
One of the most robust reports on CPG trade promotion and merchandising spending
235 CPG companies represented, across 110 store categories at 55 retailers
More than $5 billion in trade promotion and shopper marketing spending represented
The report data was
analyzed in two
overall categories:
1. Size of the CPG company based on
total annual revenue, and
2. Department within the store.
% of Responses by Client Size
39%
21%
40%
Small (< $200 Million)
Medium ($200M to $1B)
Large (> $1 Billion)
STRATEGIC
ADVISORS
2011 / 2012
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1
Introduction
Tough economic conditions have spurred trade promotion and merchandising spending decisions over the past couple
of years. The result has been tighter marketing budgets and increased pressure for quantifiable return-on-investment.
The challenge has led to some advantageous outcomes that are expected to continue to accelerate and expand in the
world of CPG marketing:
Better alignment between CPG companies and retailers
Greater emphasis on shopper marketing strategies
The largest CPG companies we evaluated are the most likely to employ measurement tactics and analytics to make
marketing spending decisions. The missed opportunity for small- to medium-size companies is significant. The more
modest the marketing dollars, the greater need to be precise and calculating in the competitive world of marketing.
For larger CPG companies, silos among sales, marketing and manufacturing departments remain a major impediment
for effective, results-driven trade and promotion programs. The greatest opportunity for these companies exists in
consistently creating and deploying targeted cross-platform, shopper-centric marketing programs.
Going Digital to Win in the Store
Three out of five companies executed digital shopper marketing programs, dominated by Facebook and social media,
in the past year. More than half expect to expand digital shopper marketing programs in the coming year. Following
Facebook and social media-generated campaigns are Twitter feeds, digital coupons, loyalty programs, and product
websites. The challenge is creating cohesive, integrated shopper marketing programs that impact shoppers’ behavior
and fully understanding the ROI on this investment.
Retailer Specific Programs
As retailers have become more aggressive, sophisticated marketers, account-specific marketing has become a more
important mix of the marketing programs for savvy CPG companies. The larger CPG companies have caught on –
some 80% employed account-specific marketing in the last year, but small- to medium-sized CPG companies have
been slower to the field. Conditions are ripe for more companies to take advantage of account specific promotions
in the next year.
STRATEGIC
ADVISORS
2011 / 2012
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Key Findings of CPG Companies
Trade Funds
On average, CPG companies spend 13.7% on trade funds as a percent of gross sales. This number is higher for dairy
and frozen foods companies, and lower for health beauty care/general merchandise (HBC/GM) companies. More than
half of the companies using shopper marketing indicated they plan to increase shopper marketing activities in the
coming year. Over 80% of large companies use accrual funding vs. only 42% of smaller companies.
Promotion Management
Only 64% of companies analyze most or all of their promotional spending, while two-thirds of companies employ
some kind of Trade Promotion Management (TPM) system, less than 20% have a Trade Promotion Optimization (TPO)
system in place. Neither system is likely to see significant increased adoption in the near term.
Pricing
Nearly 80% of CPG companies took a price increase on at least some of their products last year. Deli, meat
and bakery manufacturers are most likely to see continued increases this coming year. More than half of the
companies surveyed said they are not planning on off-setting the impact to the consumer with trade spending.
Account-Specific Marketing
While two out of three companies engaged in retailer-based account-specific marketing, the spending is markedly
heavier for larger companies. In fact, more than 80% of larger companies participate in account-specific marketing,
while less than half of small manufacturers utilize account-specific marketing. About a third of companies not
participating said they plan to implement the technique next year.
STRATEGIC
ADVISORS
2011 / 2012
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Key Findings of CPG Companies (continued)
Shopper Marketing
Three out of five companies used some form of shopper marketing program this year, and more than half expect
to increase their usage next year. This number is lower for smaller companies with less than 40% using a shopper
marketing strategy. Most of the shopper marketing occurred among the top performing retailers, and CPG companies
said they plan to increase shopper marketing activity with these retailers.
More than half of companies reportedly utilizing shopper marketing today
plan to increase their activity level in these programs in the future.
CURRENT USERS PREDICTED CHANGE IN ACTIVITY
% of Clients
NON-USER PLANS TO IMPLEMENT
% of Clients
Total
Small Client
Medium Client
Large Client
Edible Grocery
HBC
Deli
Meat
Non-Edible Grocery
Dairy
Frozen Foods
Natural/Organic
Gen Merch
STRATEGIC
ADVISORS
Q: What change in activity level for
these kinds of programs do you
expect for your client(s)? | n= 451
Q: For the clients that do not use, do
you expect this to change in the
next year to 3 years? | n= 190
2011 / 2012
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Key Findings of CPG Companies (continued)
Slotting Allowances
The average slotting cost per SKU varies widely based on the department and even the size of the CPG company.
Slotting applied on a per-store basis tends to cost the CPG company more but can be beneficial if a store priority/
cluster is being used. Paying via free goods yields the lowest average cost.
Slotting Tactics
About 70% of CPG companies are able to negotiate slotting, but less than 30% do so regularly. Tactics are most
commonly trade reinvestment or swapping out lower performing SKUs, but other strategies have also proven
successful. While 20% overall expect increased slotting fees, dairy and frozen foods manufacturers are most at risk.
Trade reinvestment and swapping out lower performing SKUs are the most commonly
successful tactics when negotiating reduced slotting, followed by bundling products.
SUCCESSFUL TACTICS FOR NEGOTIATING REDUCED/WAIVED SLOTTING
% of Clients
Trade Reinvestment
Shopper Marketing Program
Instead
Demos
Product Innovation (Proven
Incrementality of Item)
Product Bundling to Reduce Fee
Participation in Loyalty
Program Instead
Time of Year / Seasonality
Advertising Support (TV,
FSI, etc.)
Swap Out Lower
Performing SKUs
STRATEGIC
ADVISORS
2011 / 2012
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Others
Q: You mentioned that slotting is negotiable at your customer. What tactics have
been successful in reducing or waiving slotting for the client? | n= 411
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Key Findings of CPG Companies (continued)
Spending Priority
Based on current economic challenges, the fragmentation of spending choices and the emergence of new digital
and shopper marketing opportunities, understanding and prioritizing advertising and promotional spending is more
important than ever.
Top performers grew 4.5% on average, bottom declined 5.0% on average
Top gained 1.9 points on average, bottom lost 3.0 points on average
Companies are actively looking to limit or reduce spending on slotting, focusing more
on trade promotion funds, product innovation, and assortment optimization.
PRIORITY FOR INCREASED SPENDING IN FUTURE
% of Clients
Trade Promotion Funds
Slotting Funds
Customer-Specific
Marketing
Shopper Marketing
Promotion Optimization /
Analysis
Price Optimization
Product Innovation
Assortment Optimization
STRATEGIC
ADVISORS
Q: In the next year to 3 years, please indicate the priority to INCREASE spending
on each of the following. | n= 768
2011 / 2012
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Get the Full Report
This comprehensive AMG Strategic Advisors study is one of the most robust industry reports available on CPG trade
promotion and merchandising spending. It was conducted across 110 store categories at 55 retailers with 235 CPG
companies represented. More than $5 billion in spending is represented, and unique response sets number more
than 750. More than just raw data, the report also includes analysis to identify best-in-class retailers and the spending
strategies employed by top accounts.
Contact Colin Stewart, cstewart@acosta.com for a copy of the full The Trend Behind the Spend: A Study of Trade
Promotion and Merchandising Spending in the Consumer Packaged Goods (CPG) Industry. Customized analysis
and research is also available.
About AMG Strategic Advisors
AMG Strategic Advisors leverages its first-hand experience with retailers to deliver fresh, industry leading insights most
most strategy consulting firms only get second-hand. These insights provide clients a keen understanding of both the
consumer and the shopper, and their differing attitudes and behavior. With a broad source of data, best practices,
execution, and technology expertise, AMG Strategic Advisors knows what works and what does not, and can help
drive accelerated profitable growth by solving issues that are beyond the scope of daily business management such as
retail brand challenges, trade fund optimization and pricing issues. AMG Strategic Advisors provides:
Growth strategy advisory
Unmatched retailer and brand knowledge
Path-to-purchase analytics
Shopper insights research capabilities
Assortment/shelf/SKU optimization
Pricing/trade spending
Category/retailer/industry insights
About Acosta Sales & Marketing
STRATEGIC
ADVISORS
Acosta is the sales and marketing powerhouse behind more than 1,000 of the most trusted brands in stores
every day. With approximately 20,000 associates in 65 locations throughout the U.S. and Canada, Acosta provides
a range of outsourced sales, marketing and retail merchandising services. For more than 80 years, Acosta has
led the industry in helping CPG companies move products off shelves and into shoppers’ baskets. For more
information, visit www.acosta.com.
2011 / 2012
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