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GROCERY MANUFACTURERS ASS OCIATION The 2008 Customer and Channel Management Survey Doing More with Less: Winning Sales Strategies to Navigate a
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     T   h   e   2   0   0   8   C  u   s   t   o   m   e   r   a   n   d   C   h   a   n   n   e   l   M   a   n   a   g   e   m   e   n   t   S  u   r  v   e  y GROCERY MANUFACTURERS ASSOCIATION Doing More with Less: Winning Sales Strategies to Navigate a Challenging Market  GROCERY MANUFACTURERS ASSOCIATION (GMA)represents the world’s leading food, beverage and consumer products companies. The association promotes sound public policy, champions initiatives thatincrease productivity and growth and helps to protect the safety and security of the food supply through sci entific excellence. The GMA board of directors is comprised of chief executive officers from the association’smember companies. The $2.1 trillion food, bever age and consumer packaged goods industry employs 14 million workers, and contributes over $1 trillion in added value to the nation’s economy. For more information, visit the GMA Web site at www.gmaonline.org. INFORMATION RESOURCES, INC (IRI)is the world’s leading provider of enterprise market information solutionsand services. IRI provides a combination of real-time market content, advanced analytics, enterprise performance management and professional services for clients, enabling leading retailers and their suppliersaround the globe to act faster with greater confidence, and win at the shelf.McKINSEY & COMPANY is a management consulting firm that helps many of the world’s leading corporationsand organizations address their strategic challenges, from reorganizing for long-term growth to improving business performance and maximizing revenue. With consultants deployed in 50 countries across the globe,McKinsey advises companies on strategic, operational, organizational and technological issues. For eightdecades, the firm’s primary objective has been to serve as an organization’s most trusted external advisoron critical issues facing senior management. The Consumer Packaged Goods (CPG) practice serves themajority of the top global CPG companies on a range of cross-functional topics. As our clients face anincreasingly challenging market, our consultants deliver distinctive, substantial, and lasting performanceimprovements, rigorous analyses and innovative insights.Copyright © 2008 by the Grocery Manufacturers Association (GMA) and McKinsey & Company. All rightsreserved. No part of this publication may be reprinted or reproduced in any way without written consent fromGMA or McKinsey & Company.  2008 Customer and Channel Management Survey 1 Executive Summary.................................................................................... 2 Survey Overview and Methodology .......................................................... 6 Detailed Findings by Performance Area.................................................. 7 Sales Coverage and Execution.......................................................................................... 7 Pricing.............................................................................................................................. 11 Trade Promotion.............................................................................................................. 12 Shopper Marketing ........................................................................................................ 14 Developing Winning Sales Strategies: Questions to Consider............ 16 Acknowledgments.................................................................................... 18 Contacts.................................................................................................... 19 Sidebars What winning practices are worth .................................................................................. 3 2008 CCM Survey Participants ........................................................................................ 5 What it takes to win with Kroger, Target, Wal-Mart, and Costco.................................. 10 TABLE OF CONTENTS  Changes in the economic and retail environment in the past few years have puttremendous pressure on consumer packaged goods (CPG) manufacturers.Declining home values, a higher unemployment rate, tightening credit conditions, andincreasing food and gas prices have significantly reduced consumers’ discretionaryincome and dampened consumer confidence. Rising commodity costs, which aredriving some of these dynamics, are also translating into higher input costs for CPGmanufacturers, consequently threatening margins. In addition, the retail landscape has become more challenging. Many retailers have introduced new formats to meet consumer demands, and are placing greateremphasis on private label. Alternative channels are growing, and global retailersare starting to make their mark in the US. While some of these changes mean newopportunities, they are also driving fragmentation and, consequently, greater complexity for manufacturers. In this challenging market, we see great disparity between those companies thathave executed winning sales strategies and those that have not – with winnersbeing able to do far more with far less. In the 2008 Customer and ChannelManagement (CCM) survey, we defined winners across four dimensions – sales coverage and execution, pricing, trade promotion, and shopper marketing. The “best of the best” – those companies that had winning practices across multipledimensions – are achieving 3.6 percent sales growth above the categories in whichthey compete, while decreasing their sales costs as a percent of net sales by 6.1 percent. That said, the industry as a whole is ‘doing more with less.’ Overall trade rates havedeclined, along with overall sales costs. EXECUTIVE SUMMARY  2008 Customer and Channel Management Survey 2 EXECUTIVE SUMMARY Retail sales growth vs. category average,2005-06Changes in sales cost as a percent of net sales, 2005-06Best of BestWinnersOthers 3.6%2.7%-0.7%-6.1%-5.2%1.0% Winning companiesare able to “do more with less” . . . and industry has focused on improving returns from tradeTrade spendMedian, percent of adjusted gross sales 15.914.5 20042006-4.5%   -4.5%Sales teams are forced to be more productive . . .Selling costsMedian, percent of net sales 3.73.5 20042006-2.7%   -2.7% Sales teams aremore productive,and the industry hasimproved returnsfrom trade
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