Retail Marketing and Branding: A Definitive Guide to Maximizing ROI, 2nd Edition

CHAPTER 19

SMART SOURCING

Benjamin Brudler, Steffi Schreiner

Retail marketing executives often look at their peers in consumer goods with great envy: “Why is it that manufacturers of beverages, snacks, or household products pay only a single-digit commission on activation to their creative agencies, while the same agencies charge us 10 percent or more and keep asking for extra compensation as soon as we request a single change to a TV commercial or print ad?” Surely, advertising volume cannot be the only reason for this difference? It is not. Of course, consumer goods companies' huge global accounts make it easier for agencies and other service providers to offer them favorable conditions. But, to a large extent, marketing efficiency is a function of smart sourcing management. While most consumer goods giants have already implemented comprehensive marketing procurement programs, many retailers are still in the early stages of efficiency optimization.

In this chapter, we show that smart sourcing is much more than simply a case of outmaneuvering suppliers and providers in negotiations. Most importantly, it includes a critical review of internal demand and procurement process management at retail companies. To illustrate both some key levers and the impact of smart sourcing efforts, we have included an exemplary deep-dive examination of commercial print, an important line item in the marketing budget of many retailers.

Increasing marketing efficiency might be hard work, but it is ...