July 05, 2016 | Market Intelligence Blogs
In the past, creative agencies would identify the production houses they wanted to work with, and the agencies would add a hidden markup of 4-5% to the production cost that was subsequently passed through to their clients. This practice began to change with the rise of production decoupling, where marketers would choose the production houses with which the agencies would work. Production decoupling is applicable for marketers with high spend and strategic relationships with agencies, and the practice has increased in recent years. CPGs have been the leaders in implementing this because spend on production and internal maturity are quite high.
Some of the key challenges faced by marketers are:
Overcoming production decoupling challenges
Strategies that have been adopted include:
In the coming years, it will be easier for marketers to implement production decoupling as the supply market matures. Many production houses have started serving marketers across regions. On the other hand, both holding companies and agencies have also started to invest in internal production capabilities. The challenge for marketers will be choosing the best fit for a production decoupling partner.
In today’s highly competitive environment, CPG companies are expected to react, respond and innovate to meet consumer needs at a much faster pace while containing costs. GEP's comprehensive supplier evaluation looks at price, supplier capabilities, past experience with the company, service levels, and competitive differentiators to help CPG companies partner with suppliers that meet their business needs. To learn how GEP can help your company, contact us today.