Annual trade promotion spending in the U.S. currently represents 15 to 20 percent of gross sales for most CPGs and all indications are that this expenditure is going to increase as manufacturers -- and retailers -- continue to make trade promotion a greater part of the marketing mix. Significant to the promotion ecosystem? Yes. Surprising to those who know the importance to trade relations and the positive impact on sales? No.
Still, as yearly trade fund expenditures are already somewhere between $60 and $90 billion, it will take more than additional dollars for manufacturers to recognize additional benefit. Optimizing return on any increased investment in this area will require that brands 1) achieve maximum visibility into how budgets are being spent, 2) understand fully the impact of their promotions, and 3) effectively coordinate trade promotions with consumer promotions.
Meeting these requirements will require specialized resources, focus and functionality within the promotion ecosystem. That is why Inmar acquired Scanner Applications.
Scan Apps (as they're known) has, for 25 years, been the premier provider of scanner-based pay-for-performance promotional services; offering manufacturers a full service, turnkey solution for executing validated trade promotion with retailers across the country. They have the reputation for being the best in the business at "scan down" -- using POS data from the participating retailer to verify a price reduction or targeted price point and then compensating the retailer for product sold to consumers based on the POS (scan) data.
Bringing third-party discipline and objectivity to a process-driven program of trade promotion management, validation and tracking, Scan Apps helps ensure that trade marketing dollars are spent on validated units sold to consumers -- not just cases shipped out of a warehouse or into a distribution center. As a result, clients achieve greater efficiencies by eliminating spending on non-performance, forward-buy, slippage and diversion.
Over the coming months, Inmar will be actively integrating Scan App's products and services into our Promotion Network offerings to create the industry's first single-source solution for consumer and trade promotions. With the integration complete, brands and retailers will be able to manage and coordinate all promotions via a single platform that also provides critical analytics for, and reporting on, promotion performance and related budget activity.
With this comprehensive suite of consumer and trade promotion solutions available to marketers they will be able to better execute, track, validate, assess — and enhance — their shopper engagement strategies and meet rapidly evolving shopper expectations. It's innovation that will make all the difference in activating shoppers, deepening retailer relationships and strengthening the bottom line.
I invite you to contact your Inmar Account Team to learn more about Inmar's solutions for improving trade promotions and welcome your comments as to how these promotions are going to influence the marketplace going forward. You can share your thoughts in the comments section below.