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Promotion Commotion: A View Into the Needs and Setbacks of the Front Line

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

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usiness is moving again. As new products are hitting shelves around the world, new promotions are not far behind to capture the attention, imagination, and most importantly, share of wallets of more choosy, cautious, and savvy customer. Marketers are rightfully hyper-focused on sales support and driving business, deploying new tools and consumables to be leveraged across field sales, in-store, and point of purchase environments. While CMOs typically develop the strategies used to reach an audience, according to front-line individuals in the fashion, beauty, and retail industries – the sales executives, field marketing managers, store managers, and merchandising leaders who must take these tools and execute them– marketing should be adjusted to the Marketing Supply Chain because they believe that while critical to sales success, the messages and materials are being wasted.

When it comes to marketing consumables, the store managers’ message to marketers is clear: Keep it coming, but get it here on time and in the right amount. Only 9 percent of the front-line managers surveyed felt the marketing literature, point-of-purchase, or promotional materials held little value or proved to be irrelevant to the sales process. In fact, 44 percent believe that these consumables are critical to the decision-making process. The main obstacle is ensuring corporate-level marketers and front-line managers are on the same page in terms of which materials are important and when they need to be delivered in order to effectively promote a special program or incentive.

It seems so simple, yet for many retail managers it has become a point of contention. One retail sales manager even asked, “How hard is it to get a display into my store in time for the big product launch corporate marketing specialists have been training us for all these months?” Sadly for this manager and the other 112 survey respondents, when there is no visibility or accountability at the Marketing Supply Chain level, the process becomes almost impossible to execute effectively. In the world of interactive displays, flashy signage, window treatments, and larger-than-life cardboard cut-outs, optimized operations and fully automated and managed supply chains are needed to effectively exploit the critical sales touch points.

Consumable Value Set by Customer Demand Based on our research, the front line values the materials that marketing produces and provides. The drive for more — including everything from product brochures, display units, and product information sheets, samples, and price sheets — continues to make it critical to have these consumables. More than 42 percent of respondents acknowledge retail store customers actively ask for information and materials, while 48 percent acknowledge that sales feels better equipped for success when they have this comprehensive tool set. An equal number of respondents (48 percent) believe consumables help build brand awareness, equity, and advocacy. On the flip side, 7 percent of merchandising managers say their marketing collateral is of such poor quality that it doesn’t even make it out into the store.

“Proper materials, signage, and even shelf displays are all part of today’s quick-serve customer experience,” explained one respondent who is a regional general manager for a global electronics manufacturer and retailer. “Customers do not have time to search out a specific product. They rely on properly placed, described, and priced goods.”

As this shift continues, the front line is eager to achieve workflow and process streamlining in order to expedite orders and ensure the delivery of content. Today, marketing consumables are accessed through a variety of means, including direct downloads from corporate intranet sites, requests via forms, fax, or email, and — more often than not—requesting materials from a sales or customer service

© 2011. CMO Council. All Rights Reserved.

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

representative. The vast majority of respondents (82 percent) speak with a customer service or sales representative when more materials are needed. Considering the advances made in technology within the past decade, picking up the phone seems analogous to sending a fax or buying a pager.

Email requests are also widely used to access consumables, but many managers are frustrated that materials seem to just materialize. “Materials just arrive at my store without my input,” one retail director said. Another respondent lamented, “All this stuff just arrives, sometimes without warning, so we have to stop everything and figure out what to do with it.”

Process Poses a Big Problem Some 68 percent of respondents have experienced difficulty using the systems that are offered to access critical consumables. What seems to be the greatest roadblock is the system itself. A lack of follow-through and timely delivery of materials is the top issue, specifically the feeling that materials take too long to arrive (41 percent) or that requests made through the sales or customer service reps were not processed in a timely manner (36 percent).

The most sigificant breakdown of the Marketing Supply Chain was evident when 28 percent of respondents said that materials never arrived. Even the few (9 percent) who have direct access to materials through their corporate website experience significant issues. “I couldn’t find the information on the website because it was so poorly organized. By the time I found it, I was totally worn out and the promotion was over,” one senior fashion merchandiser revealed.

Also adding to the problem are materials that arrive either damaged or too late for launch dates. “The materials are just not durable enough sometimes,” said one merchandising director. “The display is expected to last for a two-month display run, yet it arrives partially crushed or warped, and we have to figure out how to make it look decent.”

The process has become so frustrating that only 6 percent give the consumable access experience excellent scores. The majority of respondents only give the systems a C grade (47 percent) while 19 percent consider the experience a failure. When asked how marketers could improve the impact of consumables, process improvement and delivery efficiencies rose to the top of the list, underscoring the sense of frustration over missed opportunities due to missed deliveries.

What is promising is that 46 percent of respondents are using some form of technology that allows them to input their individual store locations and specific marketing material needs and requirements, thereby localizing the content, the bigger issue is the other half (51 percent) who are not. For those who are leveraging a process or technology, eliminating waste because the proper quantity of materials is delivered is the top benefit (30 percent), while the systems also allow for better planning and inventory management thanks to the visibility into when materials will arrive and how many will need to be processed and stored.

Technology can enable stores to localize their content, but the channels must be enabled in order to see the maximum benefit. Still, many managers complain about working with questionable computer systems in order to generate store-specific content. “The system doesn’t work; I still don’t get the right quantity!” one merchandising manager lamented. Another hurdle has been educating salespeople about the computer system, though part of the problem may be created by user error and not the system itself.

© 2011. CMO Council. All Rights Reserved.

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

Obsolescence Obscures Opportunity In previous Marketing Supply Chain studies, the CMO Council has highlighted how old, out-of-date, and wasted materials can impact a marketing budget. From significant cost at the bottom line to increased operational overhead allocated to storage or disposal of overages, the issue of obsolete marketing materials wasting funds and taking up space is the ultimate symbol of marketing inefficiency. Yet again, waste becomes a big issue, and according to front line resources, the waste can be attributed to companies not delivering materials in proportion to an individual location’s needs.

According to respondents, materials are either too scarce to make an impact or are overwhelming in number, ending up in storage or trash. The amount of obsolescence is substantial, as 23 percent of respondents report throwing away more than 50 percent of marketing collateral. The majority (51 percent) estimate as much as 40 percent of materials are seldom used, stored, or thrown out.

“We normally end up with too many materials that then get wasted. It isn’t uncommon to receive product shots of items we never get allocation of or that arrive too early prior to product launch, resulting in no stock left by the time the campaign rolls around,” one general manager said.

What does seem to be working for several front line assets are systems that allow for store-level “personalization” — or the ability to develop profiles of individual stores of customer bases, enabling the Marketing Supply Chain to shift and adjust to best meet the needs of the individual market. Take, for example, the small store in a highly urban, multi-cultural area. In order provide a more targeted and relevant customer experience, store resources are looking to have localized collateral available in multiple languages.

Stores would also like to have the ability to head off waste prior to shipping. “I find it strange that we have an entire marketing campaign about how ‘green’ we are,” said one merchandising associate, “Every time I go back into the warehouse, I see stacks and stacks of wasted paper, display units that my store doesn’t have space to accommodate, and hanging signage, while my store cannot hang any signage. All this had to get here somehow. That isn’t green, and I have to toss this into a landfill or attempt to recycle it. What a waste.”

Most importantly, brands, who often distribute promotional materials or displays directly to retail outlets, could also have visibility into the end use, maximizing the potential for impact while also eliminating waste and over-spending. A manager of a large multi-plex movie theater explained, “Just because I have 20 screens doesn’t mean I have a ton of floor space. If I put everything out, these cardboard monsters would stack to the ceiling!”

For marketers looking to implement a more connected Marketing Supply Chain system that can reach all the way from production and distribution to the store-level resource, here are some key wish-list items directly from the front line to be included in a store/location profile: • • • • • •

© 2011. CMO Council. All Rights Reserved.

Availability and desire to have digital signage or multi-media display options Competitive brands also for sale or displayed in the store Demographics or customer base profile Dimensions and availability of shelf space for display units Number of total sales, service, or management employees in the store Overall location volume

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• Primary languages spoken by customer base • Space (square footage) available for signage or displays While the list of profile fields could be endless, front-line teams point out that without a clear understanding of who is coming in to shop and a profile of the store itself, marketers will be left to keep sending randomly allocated amounts of materials to stores, missing the opportunity to truly impact and influence buying behavior.

Conclusion Addressing these core Marketing Supply Chain issues is not a new call for marketers, but for many senior marketers, this traditionally operational function is relegated to being managed by operations or procurement. This conversation needs to be elevated, and Marketing Supply Chain optimization needs to be viewed as a key process, as it directly impacts demand generation, sales support, and marketing operational effectiveness — three key mandates marketers must face and master moving forward.

The first step to identifying where an organization sits on this continuum of Marketing Supply Chain excellence is to truly understand where and how workflow and process are impacting these critical front-line stakeholders. We entrust the execution of marketing strategies to these talented assets, yet it seems by the responses to this study, we are not fully arming them with the tools and resources that are important to the sales process. An audit of the Marketing Supply Chain must not start and stop with a per-piece inventory of the latest order. It is a multi-faceted assessment that tracks spending and efficiencies across multiple departments, resources, and end applications.

Should you question if the time investment into Marketing Supply Chain optimization is “worth” it, just ask the store manager for an office supply company. “I know that getting this right must be hard, but I would rather be helping a customer navigate our aisles than spending hours every few months tossing displays, price sheets, and giant cardboard cut-outs into the trash. The more time I have to be on the phone with corporate and, asking where my back-to-school signage is, the less time I am on the floor and productive.

It sounds stupid, but getting it right gets me back to making you money. Sounds like a fair trade.”

Interested in taking that first step to understanding your Marketing Supply Chain? The CMO Council in partnership with NVISION, has developed a free, quick audit to give you a sense of the savings and upside to optimizing your supply chain. To get started, visit http://www.marketingsupplychain.org/assessment/

© 2011. CMO Council. All Rights Reserved.

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

Where the Road Leads

Applying Mapping and Tracking of the Marketing Supply Chain to your Marketing Operations

An Expert Perspective

By Mike Perez, Vice President of Marketing and Business Development NVISION Mike Perez has developed and executed Marketing Supply Chain solutions for more than 15 years, with expert knowledge in print, point-of-purchase, and supporting technologies.

The common thread connecting Marketing Supply Chain issues is a lack of true insight into the full operations and requirements. And to be clear, the Marketing Supply Chain does not just start with art production and end when materials leave the warehouse. The initial strategic development of campaigns through to the end user and audience must be factored into the thinking; otherwise, the Marketing Supply Chain simply becomes a conveyor belt for commodities. Instead, it is time to view this critical component of marketing operations as a prime opportunity to save, speed, and maximize the experience.

As demonstrated in the CMO Council’s view into the key issues around Marketing Supply Chain effectiveness, marketers are very aware that an optimized supply chain can yield significant improvements in go-to market impact, help uplift the customer experience, and enable the sales process to drive growth. The challenge is in identifying the standard for optimization in order to become a leading practice operation.

Looking across the three key stakeholders that have been surveyed in this three-part series of papers— marketing, sales, and front-line retail and channel managers—several key issues emerge. First and foremost is the understanding that waste and obsolescence is not a minor problem, but rather one that is seeing up to 50 percent of materials being thrown out, compared to a leading practice stat of 8 percent. Regardless of where these materials end up, what is known is that they did not arrive in the hands of their intended audience in order to push a sale forward.

The second key issue is a lack of insight and awareness as to the fulfillment of materials. Even in an age of advanced technologies, many companies are still asking sales and field resources to sit and wait for materials to arrive, creating a highly inefficient and ineffective process where sales is usually let down by the operations of the Marketing Supply Chain.

Finally, we see that up-front planning, including developing an understanding of front-line resources— such as simple issues around availability of space for point-of-purchase materials—does not exist.

Without this knowledge about the end user (in this case, a retail setting), waste is bound to happen.

© 2011. CMO Council. All Rights Reserved.

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

Establishing a Standard of Excellence As we all embark on this quest to optimize the Marketing Supply Chain, as an industry we need a target—a standard that does not require perfection but eliminates those points of waste and operational neglect that negatively impact budget and effectiveness.

Over the years, NVISION has deployed a methodology to audit and assess the state of a company’s Marketing Supply Chain. This process, NDEPTH™, has enabled us to map an existing operation, identify key areas of inefficiency and waste, target opportunities for improvement, and develop a comprehensive solution to optimize Marketing Supply Chain operations. It is through this rigorous process that we have come to develop a set of leading practices that, across any company, can begin to identify immediate areas of need and opportunity.

Here is the good news: When it comes to obsolescence, the leading practice is fairly straightforward.

For obsolescence, the optimal rate is 8 percent across the enterprise. At 8 percent, the enterprise has established a process that forecasts, measures, and monitors utilization of materials to ensure that supply is, in fact, appropriate to demand. This, of course, simplifies the process that must occur to achieve optimal levels of obsolescence, but it begins to demonstrate where your own Marketing Supply Chain may compare to industry leaders.

As material requests are made, the best practice for fulfillment should be within a 48-hour window in order to maximize the opportunity and not lose sight that a customer is waiting on these critical documents to aid in their decision-making process. In many cases, we see this order gap stretch up to 10 days. In an optimal setting, a field sales executive should be able to leave his or her prospect, log into a secure site, request materials, and know within 48 hours that those materials are heading into the hands of this potential customer. Technologies such as store profiling systems and process mapping can enable and actualize this system, but this platform cannot exist by itself. It needs to be connected to a fully mapped system that tracks consumption, identifies inventory levels, and maintains levels of in-demand materials so that delays or unforeseen costs are never deal-breaking issues.

These are just a few examples of the best practices and solutions that tie together to form a seamless Marketing Supply Chain operation. And, to be sure, achieving this optimal state is difficult, requiring a cross-functional team effort to unearth all of the areas of inefficiency and waste. In the end, the payoff for the organization is measurable and immediately evident. The greatest challenge is often seeing how far standard operations may have drifted from the best practice.

© 2011. CMO Council. All Rights Reserved.

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Detailed Findings Q1.

How do you rate the quality and value of the marketing consumables you receive – from corporate or from manufacturers? (Select one) and valuable – the exact information needed 27% Timely to enable sales

23% Too many – most end up in storage or in the trash few to make an impact – quantity is too low and does not 18% Too reflect high-volume location

9% Impressive and persuasive – eye-catching traffic-stoppers 6% Late for the party – arrived long after the launch of the product Battered and bruised – right material, shoddy delivery and

5% presentation

of date and misleading – bad pricing, old products, or out3% Out of-date information

2% Clearly for another store/region/location – materials are

irrelevant to the location and to the customer, so it can’t be used

6% Other

© 2011. CMO Council. All Rights Reserved.

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

Q2.

How important is the availability of marketing literature and point-of-purchase materials in your customer’s decision-making process? (Select one) 44% Critical to decision making 39% Part of the decision, but a small part 9% Just there – neither needed nor missed 6% Irrelevant to the process 3% Totally unimportant, holding little to no value

Q3.

What types of marketing materials or information do you frequently request, seek, or use to help impact your customer’s buying decisions? (Check all that apply) 63% Product literature/brochures 57% Displays 49% Product/service information sheets 43% Samples 41% Price sheets 41% Coupons or savings cards 32% Web content 17% Digital documents 13% Third-party reviews 12% User manuals 10% Premiums 8% DVD video/audio files/memory sticks 7% Software demos 6% White papers 6% Other

© 2011. CMO Council. All Rights Reserved.

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Q4.

Do you believe these materials are important to have on-hand or on-demand?

(Select top 3) teams have more tools at their disposal and 48% Sales feel better equipped consumables help build brand awareness, 48% Marketing equity, and advocacy frequently ask for these materials as 42% Customers part of their buying process Sales have increased thanks to additional content

26% and information 22%

Customers can be swayed at point of sale, so anything and everything helps

brands have these materials, so having 18% Competitive them is the “cost of entry”

13% Opportunity does not wait for shipments from corporate consumables are good to have, but not 11% Marketing critical to the process The materials we receive are useless – they are so bad

7% (in content and quality), we don’t use them 3% Other

© 2011. CMO Council. All Rights Reserved.

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

Q5.

How do you typically access product, service, sales, marketing, or company content?

(Select all that apply) 49% Direct download from company website 44% Sales representative 41% Company website request form 38% Customer service representative 31% Email request to general corporate address 22% Pick up at point of purchase 15% Reply to direct mail 9% Direct download from third-party website 8% Request form on third-party website 4% Other

Š 2011. CMO Council. All Rights Reserved.

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Q6.

Have you ever experienced difficulty in finding, ordering, using, or requesting promotional literature or information about products? (Select one)

Yes

31%

37%

No Sometimes

32%

Š 2011. CMO Council. All Rights Reserved.

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Q7.

What are the most common operational or process issues you experience?

(Check all that apply) 41% Product information takes too much time to arrive 36% No online ordering available made through sales/customer service/etc. not 36% Requests processed in a timely fashion

30% Cannot download materials directly from website Promotional materials or product samples arrive damaged

28% or in poor condition

28% Product launched, but materials never arrived 23% Requested materials are on backorder 22% Information I requested was not what was sent Materials are irrelevant to my marketplace and cannot be

20% personalized or localized

19% Promotional pieces overly complex to use or set up 19% Quantity is incorrect 16% Materials not in the right size, dimension, or medium for use product spec, or availability was not the same in 13% Pricing, materials as it was online

9% Materials only available via download 4% Other

Š 2011. CMO Council. All Rights Reserved.

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Q8.

On a scale of 1 to 5 (1= very poor to 5=excellent), how would you rate your experiences with ordering, receiving, and utilizing marketing consumables, content, information, and point-ofpurchase materials from your company and key manufacturers?

5% 1 14% 2 47% 3 29% 4 6% 5

Q9.

Do you currently use a technology or process that allows you to provide individual store locations, including specific marketing material needs or requirements of the location?

3% 3% Yes

46%

No Not now, but a system is being launched

51%

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Q10. What are the benefits you have seen from using these systems?

Get the right number of items and don’t need to

30% store/toss excess

and inventory management now that I know when 23% Planning items are arriving…and how many are arriving

19% Localized materials are right for my customers Get the right number of items and don’t have to

14% request additional to cover floor space

allows me to provide feedback to partners so we don’t 5% System make the same mistakes twice

9% Other

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MAPPING + TRACKING THE OPTIMIZED MARKETING SUPPLY CHAIN

Q11. What type of information do you believe should be part of your store’s profile and considered when vendors or corporate marketers send marketing consumables to your store/location?

63% Demographics of customer base 42% Space available for point-of-purchase pieces 39% Dimensions and availability of shelf space 37% Overall location volume 37% Competitive brands also sold/displayed at location 33% Square footage of location 30% Option for overhead signage 29% Types of floor fixtures 29% Availability of digital signage 26% Number of sales representatives/staff 21% Number of windows 17% On-site manufacturer representatives 6% Other

Š 2011. CMO Council. All Rights Reserved.

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Q12. Thinking of the marketing materials you receive, what percentage is used often, seldom used, stored for later, or thrown out?

23% More than 50% 9% 41% - 50% 10% 31% - 40% 17% 26% - 30% 10% 21% - 25% 7% 16% – 20% 7% 11% - 15% 10% 6% - 10% 8% 0% - 5%

Q13. What are the best ways marketers can improve the impact and value of their marketing consumables? (Select top five) 70% Timely delivery and access to content 54% Fresh content that is up to date and accurate Access to content that can be customized to

48% my specific needs

Consistent content including pricing, branding, and product

42% information

Recommendations for additional products or services that

34% are complementary to search results or past order history 31% Personalized materials based on my account information 30% Online ordering or literature request 27% Provide online and print options for content access 12% Unbiased peer reviews and commentary 2% Other

Š 2011. CMO Council. All Rights Reserved.

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