Among many pieces of information that manufacturers absolutely covet are:
- Unit level data
- P&L information (by contract, category, SKU, etc.)
- Price Optimization capability
- Market Share realization
The race to get there fast with the most relative information has, for the most part, replaced shotgun cold-call techniques, dependency on partner agencies, various mass media opportunities, and pure HOPE. Today’s smart foodservice marketer realizes that HOPE is not a strategy; and they are spending time and dollars to retrieve, aggregate, analyze and construct strategy and tactics to cover all their bases in the above areas.
At one time, manufacturers would all but “froth-at-the-mouth” if they could get their hands on Unit Level Data complete with address, compliance, etc. For the longest they either did not have systems to capture and store such data or distributors were unlikely to part with this information (which was their Holy Grail) also. With the emergence of better technology to capture and provide ULD and vendor cooperation, many manufacturers are now faced with the problem of “What can I do with this info when I get it?”
Accurate Profit & Loss information depends on things like; a powerful retrieval system for acquiring data, good internal Cost Of Goods Sold (COGS) information, identification of various additional “waterfalls of cost” against initial revenue . . . such as promo money, sales commissions, incentives, distributor allowances, bill back costs, etc. Again, advances in technology have allowed new avenues of data visibility. It is now feasible to come very close to identifying “net P&L” in many cases. With some of the sophisticated trade management applications and tracking services, manufacturers can now view their shipments into distributors and compare sales and cost of every contracted piece of business to every category and SKU. It then becomes a rather simple matter of loading COGS info, along with other selling and promotional expenses to arrive at a closer estimate of actual SKU expense. Once contracted business has been identified, determining the “street” business fallout and the associated cost of that piece of business can be arrived at through some direct expense association and reasonable assumptions.
“How should I price my products in the marketplace? . . . This is a “charge” on every brand marketer’s agenda. For many years manufacturers may have arrived at pricing through a few less sophisticated techniques, i.e., What production restraints we might have; What the market will bear; What competition is doing; What our gross profit markups would suggest; What the customer has been paying . . . At best, much of this may have been a dart-throw!
Price Optimization is a dream of most manufacturers. Simply said . . . “PO is the practice of determining a specific price-point that the customer/market will accept and the producing company can obtain highest volume and profit yield.” Again, because of technology (I am beginning to think this Technology thing is here to stay!!!), today’s manufacturers are improving their position in this area. Many manufacturers are investing huge sums in ERP systems that can help them to gather and identify PO instances. The problem usually lies in their inability to obtain the correct data in the first place, to realize accurate interpretation into their ERP system. Available and sophisticated applications and better cooperation in the marketplace is improving the ability to assemble, aggregate and analyze a broader array of purchase and sales data and thus apply better understanding to current and future conditions for customer reach and price application.
What is my current and projected Market Share? WOW! Wouldn’t knowing even “half” of this equation be helpful? And I won’t overplay this because there are many great manufacturers that know quite a bit about their industry capacity and their market share. There are even more that do not! Truth is – MS is a moving target. One must have some sort of application and connectivity to data sources and electronic feeds that can continuously update customer activity and market fluctuations. Today there really is a lot of help available and much of the determining factors related to MS exist in a combination of understanding of all 4 of the Holy Grails we discussed.
So, although we looked at each of these Holy Grails separately and each can be obtained somewhat separately . . . in reality they are all best achieved and understood when they can be assembled, aggregated and interpreted from one large “funnel”. Collection and usage of information in all 4 areas is like a snowball rolling downhill; components of each area add to the collection of data necessary to best apply final interpretation. As you look for help to get-a-grip on these areas, make sure you work with a company that is involved in understanding all 4.
Answers Systems offers a complete system for managing the very complex trade promotion/contact management business in the foodservice industry. We provide the best ability to bring the ALL related data into one funnel for interpretation and use. Take some time to investigate your opportunities to realize market utopia.
Bud Hilton
Chairman & CEO
Genesis group Inc., Answers Systems
813-818-9299
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