Monday, September 17, 2012

Trade Marketing Explained


So after a super long hiatus, I am back to updating posts. This one is about trade marketing, an extremely vital part of marketing that most of us recent grads know nothing about (Other than random facts such as (“98% of purchase decisions are made at the Point of Purchase”).

Swati is a Trade Marketing Manager with United Spirits (where in the absence of ATL, BTL becomes really important) and interned with me at L’Oreal. You can find her here

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Trade Marketing is a marketing discipline that targets the ‘customer’ rather than a ‘consumer’. And your ‘customer’ could be anyone ranging from your ‘trade partners’ to your ‘shopper’. Trade Marketing revolves around creating value-propositions for both these entities to increase offtake. This could range from something as basic as a counter sales man incentive to something more shopper-focused like a promotional gift/price-off to display elements at point-of-purchase.
Now you may ask - why would anyone have a marketing function that caters solely to this ‘customer’? The answer is because:
·         It is a challenge when this consumer does not come forth and ask for your brand. You may push your primary stocks, pressurize your TSEs and DSMs and ensure secondaries, but in the absence of any marketing activities to support tertiary movement, you are gonna be in trouble in the coming months due to piling stocks at retail.
·         While brand management triggers the ‘Awareness’ and ‘Interest’ part of the AIDA model, trade marketing activities complete the circle by triggering the ‘Desire’ and ’Action’, which finally converts into an offtake.
·         While above-the line-marketing is tailored for larger audiences, trade marketing has more focused and clearly defined audiences and all marketing efforts are channelized towards this group. Most activations aim at interacting with the customer at point-of-purchase or point-of-consumption. Hence, these activations are designed in line with the overall brand strategy but customized according to local market dynamics.
·         Trade marketing has a response mechanism (like in the case of coupons, telemarketing and promoter-driven activities) which is very crucial and which is absent in above-the-line marketing (the only exception being social media marketing).
Since all of the trade marketing activities are Below-The-Line (BTL) or Through-The-Line (TTL), it is driven by data and is extremely result-oriented, unlike Above-The-Line (ATL) which is used in brand building. Hence, the marketing ROI can be easily calculated in trade marketing, which is the incremental sale that you get as a result of the marketing investment.  And, like me, if you are in a media-dark industry like liquor where the scope of ATL is very limited in terms of effectiveness of surrogate advertising; then trade marketing becomes a very crucial marketing function.
Also just like you have the proverbial 4 P’s of marketing that we were taught the moment we step into a B-School, there are the 2 P’s and 2 D’s of Trade Marketing, which are closely intertwined with the sales function. They are -
1.       Display (point-of-sale branding material, display units, disruptive visibility of your brands in the planogram)
2.       Distribution (activities to help the sales force increase the depth and width of distribution, activating all relevant channels/consumer touch points)
3.       Promotion (consumer promotion in the form of gifts/gratification that enables sampling and conversion, event sponsorships and exhibitions)
4.       Price (price-offs and trade schemes/incentives).

All trade marketing activities are designed and executed around these four elements in alignment with the brand strategy. Hence trade marketing is the function that connects the dots from the brand strategy that is centrally formulated to the market realities that sales managers deal with – thus it helps create synergies at a regional/local level.
Yet, some consumer goods companies may not have a structured trade marketing function. So if you are doing sales in one such company and your retailer tells you ‘saab kitna maal uthaoon, aapka brand move hi nahin ho raha’, you could try wearing a trade marketing thinking cap for a change. Trust me, trade marketing activities bear results which can be witnessed and measured within a few sale cycles. If you invest in an activity which will help bump up your tertiaries, you’ll notice buoyancy in your brand. Just keep in mind the two most important aspects while doing so – 
(1) carefully prepare your business case for the activity keeping in mind the local sales trends, customer preferences, market dynamics 
(2) ensure executional excellence else the activity will fall flat and your investment may not bring in the planned returns. 

3 comments:

  1. Thanks, initially when i was going thru this blog speacially at this wacky 2P, 2D idea but how is it so different from 4P as distribution can be as good as place and product display is as good as Product. Secondly, quantifiable of trade marketing woo me in the beginning but then you put in Promotion part the sponsorship and exhibition which is very difficult to quantify. All and all i really find it useful. keep blogging.

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  2. Great post. Can you share your thoughts on calculating ROI for a BTL Activity. Is it plain incremental sales in Value/ Investment. What tenure one should consider while taking incremental sale as normally during an activity, a retailer tends to pick up stock. Which is a healthy range of Return?

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