There is an almost universal desire among trade marketers to create a more strategic Trade Marketing function. In all the workshops and seminars we’ve conducted, trade marketers are frustrated that they are often left out of strategic processes and left to execute strategies developed by consumer marketing teams. There is a feeling (which we empathize with) that some consumer marketers don’t really ‘get’ shoppers and channels, and so their strategies aren’t really optimized for retail. So what is the strategic role of Trade Marketing?
Do we need a more strategic Trade Marketing function?
Before we go any further, I suppose it is important to address this key question. It’s all very well for trade marketers to desire to be more strategic, but is it good for the business? My answer to this question is, well, yes and no. Yes, in that there is a strategic role that the organization requires, and that in many organizations isn’t really covered by other functions. It is a strategic role that, in our experience, can certainly be covered by Trade Marketing. This strategic role does not necessarily need to be covered by Trade Marketing, but assuming that there is a desire to create a more strategic Trade Marketing role – here is the outline of what that role could be.
The strategic role of Trade Marketing
We’ve worked with hundreds of consumer goods companies, and we’ve found that they work most effectively when they can integrate effectively their sales and marketing activities. This requires an integrated path that connects consumer marketing efforts to the relationships and investments made with retail customers (see below). The first step focuses on consumer priorities. In every organization, decisions in this space are owned, unsurprisingly, by the consumer marketing team. The final step, ‘investment in customers’, is owned by the sales team. Therefore, that leaves three steps in the middle: shopper behavior, channel priorities, and the shopper marketing mix. The role of Trade Marketing should cover some or all of these steps.
Which ones? That depend a little on which steps are covered by other functions. If there is a shopper marketing team, they may well be already addressing the understanding of shopper behavior. But if (as in many cases) there is no formal shopper marketing function, then there is a clear role for the Trade Marketing function to take on. That role is to take clear consumption opportunities identified by the consumer marketing team, and to use these to frame up an understanding of who is the target shopper. For each consumption opportunity (let’s say, driving brand penetration amongst younger people as an example), a target shopper can be identified (bear in mind that the target shopper may not be the consumer). A more strategic trade marketing team can work with insight colleagues to create a much better understanding of how these target shoppers behave: how they shop, what influences them, and critically where they shop.
This information can then be used to fuel the next step of the process. Understanding where target shoppers can be found, and critically, where they can be influenced, helps a strategic Trade Marketing team to prioritize channels: to choose which retail outlets they should focus on for which categories and brands. Convenience stores might be a priority for one brand, but not another. Discount chains might be high value when it comes to driving consumption frequency but lousy for driving penetration amongst young consumers.
The next part of the role of a strategic trade marketing team would be to define the shopper marketing mix for each of those priority channels. The shopper marketing mix is a blend of activities that will, based on the understanding of shoppers that we have, be most effective in encouraging the target shopper to behave in the way that we want them to. In our example above, we’re looking to get younger consumers, when they are shopping, to try our brand instead of their usual brand. Trade Marketing teams should therefore identify the ideal mix of activities: what is the right range, how and where should they be displayed? What are the key messages and media that are most likely to sway these shoppers? What is the appropriate pack and price mix, and what role might promotions play?
This, finally, guides investment with customers. Investment should be focused on the identified activities as these are most likely to produce the desired shopping behavior and therefore fuel the consumption growth our marketing team is aiming for.
Agree the role of Trade Marketing
One last point. The decision on a role for Trade Marketing is not one that can be taken unilaterally by Trade Marketing, or even by sales. It needs to be something that works for the entire business and is bought into by everyone. A change in the role of Trade Marketing will impact other functions, most notably consumer marketing and customer management teams. It is critical that these parties are engaged, and see the value that this new way of working will create. Trade Marketing will simply not succeed without the support of other functions.
Congratulations! By defining a new, value-adding role for Trade Marketing you have taken the first steps towards transforming the function and the business. You have identified not only what trade marketing will do, but how it will work with others, how it adds value to other functions and the business in total.
Part of the role of a strategic Trade Marketing function is to develop channel strategy. This is becoming more and more important as channels and shoppers become more dynamic. If you’d like to learn more, download our free e-book on Managing Channels in the Age of the Digital Shopper.