Exceptions to the Rule

Recently, I sat in with some savvy in-store marketers as they judged an industry promotions contest. I will not name their product category, but it shows up in most major retail channels, usually on a local market basis. These judges know the promotional partnership and display placement game backwards and forwards. Having seen it all, they were on guard for entries that might prove too good to be true. They were particularly wary of one promotion that ran in a local Wal-Mart, a discussion that prompted this comical exchange: "We were told by Wal-Mart's category person that Bentonville absolutely forbids that sort of thing," said one judge. The judge next to her said, "That's funny. That same person told us they want more programs like this." A third said, "Our local Wal-Mart guy said he wanted it, but that only headquarters could approve it." Another said, "We were told by Bentonville that the store managers actually have the authority, but when they don't want to do something, they pretend that headquarters won't let them."No matter how many formal directives, memos, 3-ring binders and spec sheets a retailer might print, the reality is that a lot of in-store marketing policies remain inscrutable. For years now, we've warned readers that getting a program "accepted" at the headquarters level is no guarantee that it actually will be "placed" on the sales floor by the chain's collective store managers. Similarly, we've observed over these many years that headquarters-level rules such as the dreaded "clean floor policy" are most definitely made to be broken. A spec sheet provision that's a no-means-no statement at one chain is merely an overture to up the negotiating ante at another. The art behind the science of P-O-P is getting retailers to take a second look at a good merchandising idea even when the letter of their law forbids it. Still, it would be nice if there were a little bit of predictability out there. The Retailer Ranking Charts that appear in this issue's 2005 Trends Report are an attempt (the first that I've seen anywhere) to create a scouting report on how the country's biggest retail chains perform as in-store marketing partners. Our data, which compiles and digests CPG marketer ratings of what the retail chains promise and then actually deliver in-store, should add a dash of statistical certainty to the conventional wisdom your team has gathered over the years. For example, for most retailers, exceptions to the rules are the rule. But at Target, no really does mean no when it comes to your promotional or display ideas -- even the really novel ones. I think we all know that; the real value of the chart is in gauging how other retailers rank relative to the fixed, ever-unyielding standard of Target.Note this, too: Your field people weren't kidding when they said you'll need to offer up more discounts if you want aisle space in the HBA/drug channel, and extra trade dollars for the same thing in supermarkets. And finally, the "failure to communicate" scenario that I shared a few paragraphs above notwithstanding, be prepared to adhere closely to Wal-Mart's display specs. Most of our report deals with marketer/retailer relations. But there is one little chart, that talks about relations between the marketer and the P-O-P producer. And it speaks volumes. More than four out of 10 CPG executives surveyed told us that they initiate at least some P-O-P projects using an RFQ -- "Request For Quote" -- the baby brother to the advertising industry's RFP or "Request for Proposal." The RFQ process is touted as an efficient way to find new suppliers, and if that were the whole truth, we'd have no argument. However, some bean-counting consultants have created a special RFQ process that involves onerous documentation and skews toward price as the only driving factor. The nastiest RFQs bully display manufacturers into breaking out all of their creative, manufacturing and logistical services hypothetically into line items that can then be priced and treated like commodities. Is this an honest search for new suppliers, or just a game to drive down the bids of the display companies the client already knows, uses and trusts -- the "incumbents"?Our survey indicates that it may be just a game: 93% of the time, the incumbent supplier gets the job, albeit stripped of much flexibility and creative resources. This could be very bad news for CPG marketing and merchandising people. The number crunchers in your company love these things. Then again, your accounting department isn't exactly renowned for -- nor dependent on -- creativity, consumer insight and customer knowledge. We're starting to hear concerns about the as-yet-undetermined impact of RFQs on marketing campaigns. Some CPG execs believe that RFQs may lower costs, but at the expense of promotional quality and effectiveness; others believe that in the long run, they don't really lower costs at all. I'd like to know what you think about this issue. Drop me a line and let me know if I'm on target or way off base.

Exceptions to the Rule

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