Planning, tracking, and optimizing advertising and trade spend has become table stakes for marketers at many consumer goods (CPG) companies. Despite those advances, consumer promotions and engagement (CPE) remains something of a forgotten area of marketing spend.
CPE, which includes in-store consumer activation and out-of-store engagement efforts, has too often been overlooked and undermanaged. As the CMO of one CG company put it, "CPE is where all the spend secrets are buried." That's a problem.
Optimizing CPE, in fact, can help companies realize 10-30% savings in marketing spend, which can be reinvested to fund growth initiatives. Yet CPE doesn't get the attention it deserves.
Many organizations assume it represents an insignificant share of the marketing budget, or they simply don't know what they spend money on or how much they spend. Often, they just find it impossible to untangle and classify the various spend components. Alarmingly, it's not uncommon to see 80-90% of shopper marketing and in-store activity unclassified and assigned to the "other" spend category.
Here are five simple rules and tips we recommend companies use to get smarter about understanding and optimizing their CPE.
1. Use CPE to influence your consumers
It's rare to see CPE design start with the question "Does this CPE help give my consumers what they want, when they want it?" Most organizations start instead with "smash and grab" questions, such as "Which CPE can help hit a short-term sales target?" or "How can I use my surplus CPE budget to avoid losing it next year?"
Truly effective CPE involves both gaining a deep understanding of how consumers shop and developing programs to influence decision-making at critical junctures of their journeys.
Stacey Haas is a partner in McKinsey & Company's Consumer and Marketing & Sales Practices. She advises clients on how to drive profitable growth.
LinkedIn: Stacey Haas
Max Magni is a senior partner at McKinsey & Company. He is the Managing Partner of our New Jersey office and the global leader of McKinsey’s Consumer Marketing & Sales Practice.
LinkedIn: Max Magni
Biljana Cvetanovski is an expert in McKinsey & Company’s Marketing & Sales Practice. She advises clients on marketing efficiency, retail, and growth.
LinkedIn: Biljana Cvetanovski
Cathy Wu is a knowledge expert in McKinsey & Company’s Consumer and Packaged Goods Practice. She advises clients on marketing growth and sales strategy.
LinkedIn: Cathy Wu