The role of marketing in CPG sales velocity Today

Sales velocity is a way to figure out how quickly your product moves from store shelves to customers' shopping carts. From pricing and promotions to product placement and packaging, a consumer packaged goods (CPG) company can test and adjust levers to get the best sales rates for a brand.

What methods of retail marketing are more effective, and how do you measure the effectiveness of marketing efforts?

We will focus on promotional marketing in this article. Promotional marketing is a crucial aspect of retail marketing, as it allows companies to increase brand visibility, attract new customers, and drive sales. Promotional marketing strategies often involve the use of various tactics, such as discounts and special pricing, giveaways, and in-store demos (a form of experiential marketing).

The goal of any promotion should be to incentivize consumers to try your products at a low price and then return and buy them at regular prices. A sign of a healthy brand is the steady increase in its base sales.

However, not all promotions are successful in achieving this goal.  Some promotions may attract customers who are only interested in the discounted price and are not likely to become loyal customers. Additionally, if promotions are too frequent or heavily relied upon, it can devalue the brand and train customers to wait for discounts before making a purchase. Therefore, it is important for companies to carefully plan and evaluate their promotional marketing strategies to ensure they are effective in driving long-term sales growth.

It is also worth noting that the effectiveness of promotional marketing strategies may vary depending on how unique your product is. If your product and category are already well-known and common, the impact of passive tasting and promotional pricing may be the least expensive method to reach a wider audience and drive sales. In contrast, the more new and uncommon your product is, the more likely it is to benefit from active customer engagement by a brand ambassador conducting an in-store demo. For many CPG products, the proof is literally in the pudding. Sampling and tasting events allow consumers to experience the product firsthand. Brand ambassadors who are well-trained and have a lot of experience will actively engage shoppers to invite them to try your product and tell them the "story" of your brand, which will get 25% to 35% of them to buy. For in-store demo events, the cost of customer acquisition (CAC) is frequently less than half of the price of digital advertising.

Another major advantage of in-store demo marketing is its ability to measure the impact of every single event in every location on sales and brand awareness, in addition to customers perceptions of your products. Sales data and formalized customer feedback gathered during these events serve as market research that serves as a springboard for other retailers' shelves at lower costs and allowances. A key component of gathering and analyzing such data is the use of in-store demo event management software. Analysis of weekly syndicated data allows you to measure base vs. incremental sales across your key items, but it does not help you optimize your marketing expenses based on store demographics or traffic.

Types of in-store demo program execution and their impact on product sales and brand awareness.

Brand's own field marketing team

Given the spectacular successes achieved by CPG companies like KIND, Miyoko Cheese, and others that used the in-store demo brand activation strategy, some producers opt to build their own in-house field marketing organizations. They employ regional managers to coordinate events with local retail locations and manage brand ambassadors to perform the in-store demos there. The brand ambassadors are frequently independent contractors hired and trained by the regional managers. The primary benefit of this approach is its consistent planning, management, and execution across multiple geographic territories.

Outsource staffing services.

Many CPG companies (15%) use in-store demos primarily as a tactical tool for strengthening their relationship with retail stores. The company employees coordinate and perform the basic administrative tasks of arranging events, samples, reporting, etc. with local, regional, or national brand ambassador staffing agencies. This approach may be beneficial for brands that sell products that do not require special handling, preparation, or cooking. CPG brands with an appetite for an aggressive rollout over multiple geographies in a short time, funds to support it, and management infrastructure to assure results may use this outsorcing strategy.

Partner with managed services.

Utilization of dedicated in-store demo companies (agencies) that provide fully managed services is particularly valuable for CPG startups and brands whose products require special preparation or cooking. They often possess very valuable knowledge of their local markets, and their brand ambassadors are commonly better trained and more experienced. When you partner with a demo agency, they can provide a complete service, from recommending store locations for successful execution based on previous experiences to scheduling and coordinating the events. The CPG companies focused on customer acquisition, product sales, and market research prefer to partner with in-store demo companies for better results.

Cost considerations

It is safe to say that two important factors that should be taken into account when calculating the cost of in-store demos are labor costs and administrative overhead. Both of these factors can be optimized with the aid of quality in-store demo management software.

The products (cooking, preparation, or special handling), the location (labor cost), and the duration of the event all play a role in determining the cost of the event itself. Expect to pay between $25 and $35 per hour for the services of an experienced brand ambassador (food and beverage, non-alcohol) who will actively engage shoppers to experience your products and convert over 28% of them into new customers.

The administrative overhead will depend on the type of demo management strategy selected and can equal or surpass the cost of the event itself.

Combining multiple execution methods on a single campaign management platform.

The potential goldmine of data in CPG retail marketing is sometimes concealed from view. It is common for the data produced by in-store demo campaigns to be ignored or underutilized. 

‍

When CPG brands collaborate with local, regional, or national demo and staffing companies to orchestrate product sampling campaigns, they frequently miss out on opportunities to capture and leverage meaningful data. These service providers typically deliver post-demo reports as part of their package. While their data is valuable, it's presented in diverse formats and structures specific to a provider, which makes it difficult to aggregate and analyze. Even when digital reporting tools are used, data is typically limited to the demo partner's region of operation, preventing brands from gaining a comprehensive view of their marketing efforts.

Conclusion

This article is written by Gregory Yankelovich of Grapevine Marketing Solutions. The company provides Demo Wizard Sales Accelerator, data-driven in-store demo management web-based software. Sales Accelerator offers a unique opportunity for CPG brands to reduce the administrative overhead of in-store demo marketing, support multiple types of execution strategies, any combination of standard reporting, and harness the full potential of in-store marketing data.