If retailers, with limited time and space for promotional activity, are to get maximum benefit from increasingly sophisticated market analysis, they must put strong building blocks of data in place says Future Positive By all accounts we live in an Information Age. This is certainly true for the market research industry, which has seen the advent of EPoS data during the 1990's and the increasing availability, primarily driven by the major supermarkets, of data covering the whole of individual retail chains, now detailed down to individual store level. Such an explosion in information has inevitably led to better quality and accuracy in the regular tracking and reporting of key performance indicators such as brand volumes, market share, price and distribution. While such enhancements to top-line indicators are incredibly important to manufacturers and retailers alike, the wealth and richness of data available today, allied to technological improvements and aligned with analytical expertise, has also created opportunities for much better informed decision making. This is because marketing activity can now be assessed and evaluated in more detail and with more clarity then ever before. Marketing investment is being investigated from every angle, and the list of issues to be addressed soon gathers a momentum of its own: How well are promotions working in generating additional volume, revenue and profit for my brand? Which promotions work best ­ multibuys, linksaves, price cuts, extra free? What differences are there by offer level ­ a 3-for-2 multibuy versus a buy-one-get-one-free, or a 10% versus 20% price cut? What is the impact of additional in-store support such as special displays or shelf-talkers? What is the effect of my media activity and are there differences between media types ­ TV, posters, radio, press and so on? How price sensitive is my brand? Does this differ by pack size? Who are my key competitors and can I be aggressive and lead, or passive and follow? And that's just the basics. Figure 1 on the facing page, focusing on promotional evaluation, begins to illustrate the point. This compares the volume impact from promotional activity across two pack sizes of the same brand. Generally, the greatest impact comes from multibuy promotions, with Mbuy 3, the most aggressive of the three offers and run only on pack size B, showing the biggest individual sales uplift at 123%. Getting the brand onto in-store displays to give it that extra visibility is important because it has a significant effect in generating additional sales ­ up 60% or 70%. Shelf-talkers also have a part to play, but clearly they do not have the impact of in-store displays ­ though they are significantly cheaper, of course, a consideration which should not be underestimated, and highly relevant when making benchmarks such as promotional return per pound spent. Price cuts appear to have a small impact when compared to multibuys, but due consideration needs to be given to the multibuy offer levels ­ only then can a real comparison be made, and again, it is worth bearing in mind that price cuts are often cheaper to fund than their more aggressive cousins. To get the full picture, then, these promotional impacts need to be assessed from a revenue return and profitability perpsective, leading to better decision making in terms of which promotions to run in order to meet brand objectives. This could be a relatively simple decision if the objective is purely about selling as much volume as possible, but it becomes more complex if volume returns have to be balanced by spend constraints and targets against brand revenues and profitability are brought into the mix. So far, this relatively simple example of promotional evaluation has ostensibly considered the perspective of only the manufacturer. A big potential benefit for retailers is the obvious natural extension to the example ­ reviewing promotional performance in a category management context. Individual pack size promotions do generate additional volumes and revenues for that particular pack but some, or often all of this growth comes, firstly, from within the brand, stolen from its other pack sizes, and, secondly, from the wider category, stolen from other brands. This is an incredibly important consideration when there is limited space and time to run promotional activity and when it comes to making decisions about the right promotional mix to optimise category performance. Another example is illustrated by figure 2 in which we see that a particular promotion on brand A, pack 1 grows its volume by 51%. However, this gain in volume is at the expense of a number of other packs within the brand ­ pack 2 down 26%, pack 3 by 19% and pack 4 by 7% ­ and a number of other brands within the category, brands B and C jointly taking the largest losses, both down 20%. Overall, the category has still been expanded by the promotion, up 9%, but there are many instances where this is not the case and the category remains flat as a result of widely incurred losses by competitor brands. Due consideration also needs to be given to the revenue picture since the value of the additional volume generated (all lower value than normal since the promotion has reduced the price) combined with losses incurred across the category of brands at full price may well mean a decline in overall category revenue. And again there's the profit side to consider. We have briefly explored how EPoS data is helping to take a more indepth look at promotional evaluation at individual pack size, brand and category level. The next extension has to be a more indepth assessment of promotional performance across other sectors of the retail trade. The desire to ensure that the right promotions (what type of promotion and to what offer level?) are in the right place (which channel/sector/retailer?) at the right time is there. The mutual benefits to manufacturers and retailers are just too great to ignore ­ they can be million pound decisons. The level of sophisticated analysis required to address such issues can only begin when there is a strong basic building block of EPoS data available ­ barcode driven, individual store level (a representative sample will do) with reliable quality and to regular weekly supply. In this regard, the convenience sector has taken tremendous strides in recent years. Developments in the provision of EPoS data do need to continue apace, however, if this information is to genuinely inform and influence the decision making process. There is nothing to fear but progress and the rewards that come with it ­ better promotions and category management, more volume sold, higher revenues, better margins. Sounds like a bargain. {{GROCER CLUB }}