TV and Distribution Critical to CPG Brands' Long-term Health: Study

CHICAGO - TV advertising and distribution are key drivers of a brand's ability to maintain long-term growth, with TV being the largest driver, according to a new study conducted for Information Resources, Inc. here.

The marketing information provider released top-line results yesterday from its IRI Long-Term Drivers Consortium Study, which was initially launched in mid-2006. Since its inception, the study has been utilizing brand information from a consortium of national CPG manufacturers to quantify the importance of TV advertising, in-store promotion, distribution, and brand variety on the long-term health of brands and the overall CPG industry.

IRI said it is recruiting for a second IRI Long-Term Drivers Consortium Study, which will begin late this summer.

"The IRI Long-Term Drivers Consortium Study participants are taking a closer look at their own brands and quantifying the importance of TV advertising, in-store promotion, distribution and brand variety on the long-term health of their brands and the overall CPG industry, so that they can understand both short- and long-term drivers of brand sales," said IRI Global Services President Sunil (Sunny) Garga.continued Garga. "They can objectively make the right trade-offs in spending allocations, deliver required short term ROI, and build sustainable brand value. This is about brand reforestation; that's exciting."

The consortium reviewed more than 24 categories and drilled down to 10 categories and 30 brands during the first wave of analysis. They studied five years of history to separate short-term versus long-term drivers, analyzing such categories as adult nutritionals, salty snacks, processed cheese, packaged fruit, air care, food storage bags, spirits, soup, juices and household cleaners.

Among the top line findings, said IRI:
-- Short-term response to TV advertising does not always result in long-term growth.
-- TV advertising can, but does not always, lower price elasticity; distribution/variety was more likely to be associated with lower elasticity.
-- Quality trade promotion offers a marketing dilemma: It is an important driver of short-term volume and long-term growth, but it also raises price elasticity in the long term.
-- Price discounting drives increased price elasticity over time.
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