New research from three separate organizations sheds light on the increasing influence of trade marketing on promotion spending.
In recent weeks A.C. Nielsen, Cannondale Associates and Carol Wright Promotions, have each released surveys which probe the relationships between manufacturers, retailers and the money they spend promoting consumer products.
While their specific research goals and techniques varied somewhat, a common thread runs through all three studies: Ad and promotion strategies and spending are becoming more account-centered. The Carol Wright 18th Annual Survey of Promotional Practices has has documented a steady shift of spending toward trade promotion for more than a decade, although the trend has leveled off in the past two years.
Carol Wright Promotions, Naperville, Ill. sponsored the research, which has been known in prior years as the Donnelley Survey.
In the latest survey, the share of promotional dollars allocated to trade promotion increased slightly, from 50.5% in 1994 to 50.7% in 1995. Consumer promotion slipped from 26.2% to 24.2%. Media advertising picked up from 23.2% of spending in 1994 to 25.1% in 1995.
While the results show slightly more spending on media advertising, that activity can no longer be characterized in the traditional way.
"Media advertising programs are being designed by packaged goods manufacturers to support more than just brand equity," said the survey report. "One third (34%) of the media weight represents integrated programs combining consumer and/or trade promotion objectives."
That 34% breaks down as follows: Manufacturers said 14% of the spending is used to support "brand equity and consumer promotions."
Another 7% went toward "brand equity and trade promotions," while 13% was used for "brand equity and trade and consumer promotions." The balance of the media spending (66%) was allocated toward "brand equity only."
The trend toward local and account-specific spending is reinforced by several other results from the Carol Wright survey. In one question, manufacturers were asked about their present and projected participation in several types of combined promotion practices.
When asked about their use of "retail/account-specific micromarketing promotions," 85% of respondents reported current usage in 1995, while 91% projected usage for 1996. Asked to rate the importance of this activity, just 11% gave it a "high" rating in 1996, while 34% projected a "high" importance rating for 1996.
Similarly, when asked about their use of "local/regional retail specific advertising," 76% of manufacturers reported current participation, while 73% projected use in 1996. Importance ratings rose significantly, with 32% reporting "high" importance last year and 42% projecting a "high" degree of importance in 1996.
Some definitions used in the Carol Wright research partly mask the degree to which promotion activities are becoming account-centered. Respondents were asked about the usage and importance of "in-store promotions" and "targeted promotions electronic retail," both account-centered activities under the heading of Consumer Promotion Practices, for example. Some 97% of respondents reported using in-store promotions in 1995 while 94% projected using them in 1996. Importance ratings for this activity are rising significantly, however, with 30% giving it a "high" rating last year, and 44% projecting a "high" importance this year.
Along with the A.C. Nielsen and Cannondale research (see Pages 4 and 6), the Carol Wright research offers a snapshot of the rapid shifts taking place in brand marketing.