Reports are that the new accounting rules for trade spending, requiring it all be deducted from reported sales revenue, will result in an average net revenue loss of 8.5 percent among packaged goods companies.
 Given that 60 percent or more of marketing budgets is allocated to trade spending, the pressure is on as never before to make sure that every trade dollar invested in a brand grows that brand -- in image and equity as much as in sales.
This mandates brand- and business-building strategies at retail.
And yet, as the recent Reveries.com survey shows, the majority of marketers remain stuck in a world where shipments are more important than consumption, and distribution more a priority than marketing. That is an attitude from the era of "volume at any cost" that should have ended a long time ago.
In what may be the biggest bombshell of this survey, 53 percent say that most marketers either do not have a retail strategy or don't know whether they have one (which is really the same as saying they don't have one).
That 69 percent of our respondents said that most brand marketers view retail primarily as a distribution channel, versus just three percent who said it is viewed as a marketing medium, is one of two aftershocks to the no-strategy bombshell.
Sure, one could argue that distribution can be a strategy; indeed, smart distribution planning has served some brands quite well. However, that only three percent -- three percent! -- of respondents said retail is viewed primarily as a marketing medium is shocking.
It is not that the response does not reflect the situation. It's that it underscores how far most marketers are from maximizing their effectiveness at retail. Marketers simply can no longer afford to ignore the rich possibilities of retail as a marketing medium. It is astonishing that so few have considered the retail environment's sheer creative potential and astounding that so many are missing the opportunity to build their brands when and where purchases are made!
In what may be the biggest bombshell of this survey, 53 percent say that most marketers either do not have a retail strategy or don't know whether they have one.
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The second aftershock is that only 35 percent said that most marketing programs at retail are consumption-driven. That's another way of saying that what the shopper needs and wants do not matter. Meanwhile, 32 percent said most retail programs were shipment driven, while 27 percent said they were both shipment- and consumption-driven.
While these numbers could be interpreted to mean there is a considerable focus on consumption, let's not forget that 53 percent basically say strategy is not reality at retail. Driving consumption requires having a strategy -- a shopper-focused strategy. The fact is, as we all know, the entire sales incentive system is premised on shipments, not consumption.
This drumbeat rolled on in the survey's open-ended question concerning the keys to marketing brands through retail. By our count, 53 percent of respondents provided answers that suggested a preference for tactics over strategy, with 47 percent offering comments that indicated a more strategic approach.
While it was gratifying to see so many thoughtful and sophisticated comments, it was distressing to see so many remarks reflecting the old "stack 'em high and watch 'em fly" mentality. A good number of the responses actually fell somewhere in between, emphasizing working with retailers, but not mentioning marketing to shoppers.
At least now manufacturers can make the case to retailers that trade spending without clearly accountable, increased sales results, is no longer an option for them.
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In fairness, some may be assuming that working with retailers is premised on marketing to shoppers, but that assumes too much. A retail strategy must be based on shopper insights and behavior as much as retailer insights and collaboration -- a point of view that apparently is mired in the minority.
What is clear above all else is that marketing strategy at retail still has a long way to go. The good news is, it is further along than it was five years ago. Better still is that these new accounting rules are likely to accelerate the trend. At least now manufacturers can make the case to retailers that trade spending without clearly accountable, increased sales results is no longer an option for them. This is the new reality that must be faced by manufacturers and retailers -- together.
And if that doesn't work, maybe a little reminder about Wal-Mart will help get the job done. Wal-Mart is coming to everyone's neighborhood and all evidence is that competing against its supply chain juggernaut rests heavily on having strong marketing programs. Competing against Wal-Mart on price alone simply won't fly -- just ask Kmart.
Have we heard the bugle call? It's time to wake up and make strategy a reality at retail.
The late Mel Korn was chief executive officer of Collaborative Marketing Worldwide, a New York City-based unit of Publicis Groupe, specialized in building brands through retail channels.
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