Trade spend and performance: Internal analgesics

DSN has partnered with Competitive Promotion Report and IRI to create a series of exclusive reports that analyze the impact of trade promotion activity on core front-end merchandising categories. The following are key findings for the internal analgesics category:

  • Both retail prices and retailer margins of total U.S. promoted products in the internal analgesics category have maintained the same relative price gap in the food, drug and mass channels over the past 21 months. Generally, retail prices have increased, and retailer margins have decreased across all three channels during this time period;
  • Average retailer margin of total U.S. non-promoted products increased slightly from 32.6% in December 2011 to 34.2% in August 2013, while average retailer margin of promoted products saw a hefty decrease from 42.6% to 36% during this period;
  • An analysis of average retailer margin by subcategory for the drug channel is revealing:
    - Tablets have decreased from 42.2% in December 2011 to 26.6% in August 2013;
    - Just as occurred in the food channel, there was a nominal increase for liquids from 33.5% to 34%; and
    - Feminine pain relievers average retailer margin in the drug channel during this same period declined from 39.4% to 34%;
  • Although there have been many swings, overall average trade spending — defined as off-invoice allowances and bill backs multiplied by promoted units — has declined over the past 21 months from a high of 3% of retail sales in December 2011 to a low of 1.2% in August 2013;
  • Unit sales tracked closely with average trade spending for the first six months of the study, but the two key metrics have not tracked consistently since that time;
  • During the past 21 months, manufacturers have averaged 2.3% trade spending against the liquids subcategory of the internal analgesics category, 2% on tablets and only 0.7% on feminine pain relievers:
    - Both average trade spending and unit sales for the tablets subcategory have declined slightly during the study period but appear to be positioned for increase in the coming months;
    - Unit sales did not necessarily track with average trade spending for liquids; and
    - Despite having the lowest share of the three subcategories, feminine pain relievers unit sales tracked most closely with average trade spending;
  • Relationship between average retailer margin and average trade spending varies by subcategory:
    - As manufacturers reduced average trade spending on tablets, average retailer margin percent decreased from 45.4% to 30.9%;
    - Overall, average trade spending for liquids fluctuated sharply down — from 3.5% to 1.3%; and
    - Inverse relationship between average retailer margin and average trade spending apparent during the first eight to 10 months of study and then a direct correlation after that;
  • Relationship between market share and average trade spending also varies by subcategory:
    - No apparent direct correlation between market share and average trade spending;
    - Average trade spending varied sharply from 3.5% to 1.5% during first eight months of the study, and declined gradually after that, and market share responded consistently; and
    - Despite fluctuations in average trade spending, market share for feminine pain relievers has increased gradually.

To view the full report with additional charts, click here.

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