Margins + Working with Supermarkets

Question 1

Front Margin

Answer 1

Selling price - Cost price / Selling price

Or RRP-COGS/RRP

Question 2

Back Margin

Answer 2

(Total Sales - Total Cost - Total Wastage + Total Investments) / Total Sales

Question 3

What’s another word for “Back Margin” used by Supermarkets?

Answer 3

C3 or Contribution Margin

Question 4

PROMOS: Frequency

Answer 4

How often your brand is going to be on promotion

Question 5

PROMOS: Depth

Answer 5

How much discount is given

Question 6

PROMOS: Base

Answer 6

Off promotion - being sold for full price

Question 7

PROMOS: Uplift

Answer 7

The increase in volume sales driven by the promotion

Question 8

PROMOS: Margin Maintenance

Answer 8

Keeping the buyers’ percentage margin flat while being on promo

Question 9

NSL

Answer 9

Normal Shelf Location

Question 10

What’s another word for NSL?

Answer 10

Parent or Primary Space

Question 11

Secondary Space

Answer 11

Place in a store where products are highlighted e.g. Gondala ends

Question 12

ASP

Answer 12

Average Selling Price (the average price of your product over time including promos)

Question 13

VSOD

Answer 13

Volume Sold on Deal - The percentage of Total units sold on promotion over time (usually 1 year)

Question 14

Promo Penetration

Answer 14

The VSOD when the promo is live (only on multibuy promos)

Question 15

What are the three types of promos?

Answer 15

Price Down promo, Multibuy,, introductory offer

Question 16

What is margin maintenance?

Answer 16

Keeping the retailers margin the same as when they’re off promo.

Question 17

Promo Fee

Answer 17

The Admin fee for setting up and running the promo

Question 18

Site Fee

Answer 18

The cost for going on a gondala end

Question 19

What are the main ways you can do margin maintenance?

Answer 19

Retros, Triggers, Case Discounts

Question 20

What is a retro?

Answer 20

Cost price x % discount usually used in Price down promos

Question 21

What are triggers?

Answer 21

Cost Price x (% discount x % promo penetration) Used for multibuys

Question 22

Case discounts

Answer 22

A percentage off each case (AVOID!)

Question 23

What is price establishment?

Answer 23

A product cannot be on promo for more time than it is off promo.

Question 24

What are the 5 ways you INVEST in a listing?

Answer 24

Promos, In house marketing, Listing fees,, site fees + Overriders

Question 25

What is an overrider?

Answer 25

Annual listing fee based on turnover of brand (generally considered bad practice now.

Question 26

What is a listing fee?

Answer 26

A lump sum “sweetener” to get them to give you the listing - try and avoid this and deflect saying how you’d invest that money in in-house marketing + competitions etc.

Question 27

Site fees

Answer 27

The cost to go onto a second site (if you are offered it) The cost varies depending on the quality of the site.

Question 28

Promo fees?

Answer 28

Admin fees for running a promo

Question 29

What should you avoid when it comes to promo fees?

Answer 29

Lump sums - try and switch it to £10 per site rather than a lump sum.

Question 30

What are the three things you need to find out from a retailer?

Answer 30

1. Promo periods - length, quantity + timing.
2. Promo strategy for the retailer
3. Promos attitudes for retailers customers