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Case Studies in Program Measurement

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Optimizing Marketing and Trade Spend

A Case Study for Using Marketing Measurement to Optimize Programs

Problem:

A leading OTC (over the counter) drug company was rethinking how they spent their money with their retail trade partners. They were not sure how they compared with their competitors and if they were at a disadvantage in their marketplace. The company was open to changing their spending practices if:

  • There was documented evidence that any change would not violate the Robinson-Patman act and
  • Their competitors were engaging in activities that put them at a disadvantage and
  • It would improve their relationships with their key retail partners

The company was interested in understanding all direct costs of doing business with their retail partners, including logistics, couponing, packaging, and the indirect costs associated with deploying the sales force and sales and marketing teams against each customer. In the end, the company wanted a new methodology for their customer P&L’s and new measurement criteria that could be used to more accurately measure the financial state with each customer.

Our Solution:

We conducted interviews with 23 companies to gather additional information and insight within the consumer goods marketplace.  This industry study provided a thorough overview of industry practices including:

  • The prevalence of retailers requesting or contemplating requesting efficiency allowances and how manufacturers were responding to these requests
  • How P&L’s were used with both retailers and manufacturers including their sharing throughout the industry
  • How manufacturers were allocating their funding to their retail customers and any flexibility that they had in the process

Result:

  • After reading our industry findings and accompanying recommendations, the company decided to completely revamp their spending approach and practices allowing them to better meet their customer’s needs at critical time periods and more effectively drive their business
  • Sales forecasting accuracy increased by more than 40% once the new, more stringent planning and measurement approach was implemented
  • The company increased their sales by +8% during the following year which was more than double the increase seen in the previous year.

Timing:

  • The engagement took only 8 weeks from inception to the final recommendation.
  • Recommendations were implemented within 4 weeks of the report being presented to senior management.
  • Changes to their go-to-market strategies were enacted immediately to ensure they were more competitive in the marketplace.
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Promotion Event Planning and Analysis

A Case Study where Analysis Delivers Increased Sales and Profit

Situation:

A manufacturer of baby food was unsure how effective their sales and marketing initiatives were with both their consumers & the retail trade. The management of the company wanted to:

  • Better understand the effectiveness of their current planning process
  • Evaluate their current spending guidelines, practices and the ROI on 50 of their events
  • Set up a new planning & evaluation process to be used for their next planning cycle
Our Solution:

Alpha 1C analyzed and summarized current practices:

  • There was no formal ROI measurement being done and once analyzed, most events delivered a negative ROI
  • There was not a systematic approach to planning, sales forecasting accuracy was low, profitability was being negatively impacted and the relationship between sales and marketing was strained as a result

Alpha 1C led the development of a framework and methodology for both planning and evaluation (ROI)

  • Additional data needs were identified, vendors were recommended, packages evaluated and additional data purchased
  • A clear picture of the value of the data, it’s usage, and it’s ROI was provided
  • We worked closely with the client’s software vendor to incorporate the planning and evaluation framework

Result:

Alpha 1C implemented a new process for planning and promotion evaluation:

  • Employee (sales) incentive plans were changed to reflect a new focus on profitability vs. sales
  • The company increased the efficiency of its spending resulting in:
    • An 8% reduction in spending (removal of inefficient spending)
    • An increase in sales of +12% (almost triple the previous year)
    • An increase in operating profit of +19%

Timing:

  • This Alpha 1C analysis was completed in less than 3 months