Prior to the 1990s, manufacturers held all the cards when it came to bringing a product to market and retailers simply had to deal with the process of displaying these products throughout their stores. It would then be a matter of prioritising certain products over competitors based on the popularity of it.
However, trade marketing then became popular in the nineties, leaving retailers in a level playing field to manufacturers and making the act of getting products into the hands of consumers more of a compromise between both parties. As things stand today, retailers hold grounds for negotiating how much exposure a product will have in shops, on shelves and in the eyes of consumers.
What is trade marketing?
Trade marketing covers a suite of activities from initial presentation of a product to the trade customer, through to in-store activities and post-purchase marketing. The activities are bespoke to the retailer and should understand their customer in order to engage and drive sales and loyalty.
What are trade marketing activities?
Trade marketing activities are negotiated when presenting a product for initial listing, and then redefined every year in a joint business plan, or discussed as the year progresses. At the presentation stage, any pitch should show why the product suits this particular retailer’s customers and how it will grow the category. The supplier should be well versed in the options the retailer has, but also not be afraid to put forward new and innovative ideas.
The idea is to have a strong launch and increase awareness and sales with bespoke activity. Investment should be in line with sales expectations, and within financial parameters set by the supplier. It may be overinvestment for the first 2 years in order to establish the brand, and then this tapers to a lower level. It really depends on the balance of the overall marketing mix and from where sales will be best generated. It is invariably a combination of above the line and in-store activity.
Examples of trade marketing activities a manufacturer may offer will depend on how consumers value the product and the category, and what mechanic is most appealing. These may include include:
- Discount at launch
- Straight discount at key times of the year
- Multi-buy discount in line with competitors
- Link-sell to complementary products
- Free gift with purchase
- In-store sampling where permissible
- Tagged advertising
- Exclusivity period
- Education to store staff through central portal
- Investment in tailored shelf theatre
- Investment in window posters, shelf edgers
- Aisle fins, floor posters, in-store radio, in-store TV
- Assets for .com
- Digital advertising for .com
Examples of trade marketing activities a retailer may promise to a manufacturer in return:
- Exposure on printed and digital advertising
- Specific shelf placement
- Multiple facings on shelf
- Wide distribution
- Inclusion in seasonal promotion (if applicable)
- Prominence on .com
Why trade marketing is important
Excellent trade marketing allows a brand to stand out, take market share and grow the category. The investment level, creativity of activity and strength of messaging shows intent to work closely with the retailer and drive success for the brand into the future.
Other benefits to trade marketing are that it:
Creates a strong relationship between manufacturer and retailer
Allows the product to have a loud voice to customers, which may or may not match other brands in the category
Compliments above the line marketing, therefore reinforcing the brand message with the consumer
Shows intent to commit to success.
What is a trade marketing strategy?
As with any area of marketing, the process of trade marketing is made easier if you formulate a strategy for it. Through doing this, you can set out an extensive plan for your strategy, as well as goals and opportunities to review and make changes on your plan after set periods of time.
Within a trade marketing strategy, it’s important that you plan ahead, spend time researching before starting the process of implementing your strategy and create a thorough outline of how you want your strategy to look and, ideally, pan out over future months.
What is a trade marketing plan?
A trade marketing plan would be created within the structure of any other form of marketing strategy. However, the key difference is collaboration with the sales team in order to create bespoke plans that meet each retailer’s strategic needs. For example, understanding if a retailer sells at premium prices or is a discounter, if shelf barkers with brand messaging are possible or not, if FSDUs are allowed in store or not etc.
The initial presentation of the brand is critically important in how you have researched, tailored and generated ideas that will truly drive awareness and sales. The retailer doesn’t have elastic shelves and so needs a space donator which should be recommended in the initial proposal. The overall plan must be compelling, and this includes above the line messaging and execution, product packaging, configuration, regulatory compliance and logistics management. Retailers are looking to reduce suppliers and administration, so working with an existing partner like Ceuta Healthcare can overcome this obstacle.
Strong trade marketing plans that continue to innovate and understand changes in consumer behaviour and how the retailer is changing its own strategies engender strong supplier / retailer relationships. Ultimately, this has to drive sales for both parties.