As usual, there were very few manufacturers, albeit more than last year, at the Food Marketing Institute's annual MarkeTechnics convention last month. I keep thinking they'll show up, because a lot of what manufacturers need to understand about electronic marketing in the stores is shown at MarkeTechnics.
The manufacturers we spoke with who did attend made some interesting comments. First, there isn't a whole lot new from their perspective on these programs. Second, there's even less new in terms of involving manufacturers in the programs, except as a revenue source. With the exception of Catalina, APT and MicroEnhancements, the biggest problem is that there is no avenue for manufacturers to participate easily, except after the fact. And the after-the-fact participation usually occurs through the sales organization, not brand management. The problem is that 90% of the frequency programs currently installed are retailer home-grown programs. Either the retailers implement the programs completely from scratch, or they use a third party to handle the details, which is very similar.
The most recent study released by FMI, "Guide to Planning Frequent Shopper Programs," exhibits the following approach: "Once your program is successfully implemented, approach suppliers about additional funding and support." The flow charts in the study show "Investigate manufacturer participation" after program rollout. I think we've got it a little backwards.
Two of the manufacturers we spoke with at the show verbalized the real problem: the manufacturers have a lot more money than they have time. It's extremely difficult for manufacturers to even find out which retailers have programs, never mind how to participate. They're interested in participating, but they really don't have time to be researching who's doing what. As a result, the only people within the manufacturer organization that know what's going on with specific retailers are the sales representatives. And they end up "trading" trade dollars from displays to frequent shopper programs, and dumping unpopular items into the programs in order to make their end of quarter quotas. As a result, retailers end up with ineffective products in their programs, which reinforces their general belief that manufacturers should be "used" as a source of funds.
How about a different approach, where manufacturers are involved from the beginning, and really help the retailers design the programs? There needs to be more upfront discussion between manufacturers and retailers to make shure the information that's being collected and the programs that are being designed meet the needs of both parties. Otherwise, retailers may have trouble getting the time of manufacturer decision-makers so that funds may be shifted from direct to consumer to in-store marketing.