Trade Marketing

Trade Marketing
Trade Marketing : key concepts

Shopper vs consumer
ZMOT, FMOT, SMOT
Channel, customer, shopper, category understanding
Sales fundamentals
Value for Trade concept and tools

Trade Marketing Plan: How to exploit

Map
Understand
Plan
Communicate
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Trade Marketing : what is it?

Trade marketing is the application of marketing
techniques to
Retailers to reach/win with
Shopper

Trade Marketing : key concepts

Consumer vs Shopper
Consumer

= person with needs

Shopper

= person that buys

Trade Marketing : key concepts

The distinction between shoppers &

consumers

First Moment of Truth (FMOT)- the moment when the shopper chooses the products in the
store. The shopper may come to the store with an item on their list, but once they get to the
shelf, they may purchase a different flavor, a different size, a different brand, trade to a betterperforming or better priced product or choose a product from an entirely different category.

Second Moment of Truth (SMOT) the moment when the consumer use products. This
includes studying and understanding the consumer needs and desires

We must win at FMOT before a

shopper can become consumer!
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Trade Marketing : key concepts

MOMENTS OF TRUTH
Zero
First

Growth
Second
Trade Marketing : key concepts

Trade Marketing : key concepts

Win in the
First Moment of Truth is crucial

TRADE MARKETING and Sales

Organization manage the FMOT

Trade Marketing : key concepts

Marketing Activities
Above the line" marketing activities to consumers and
shoppers as advertising on air, print, internet, outdoor,
social media, trial campaign
Below the line" marketing activities to retailers for
shoppers: folders, in store promotion, fidelity
program,collections,
in-store
visibility,
display,
comarketing....
FMCGs: Split between
above and below the line
50/50
Trade Marketing : key concepts

Why Below the Line activities are important

Research reveals the importance:
On average, 84% shoppers claim to plan the purchase of the
category
61% shoppers claim to plan the brand

More than 50% switch the brand in-store

Yet we spend many times more on traditional/above

the line support than on in-store support/below the
linea
Trade Marketing : key concepts

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CHANNEL, CUSTOMER, SHOPPER, CATEGORY

UNDERSTANDING

Trade Marketing : key concepts

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1. The Channel/Customer Understanding

Checklist
1.
2.

3.
4.
5.

What are your organizations overall business objectives, goals and strategies?
What do you see as your primary competitive advantage? What are your core
competencies?
How has your organization delivered against your organizational objectives in
the past?
How would you describe the culture of your organization? What are the
strengths/weaknesses of this culture?
Etc

Trade Marketing : key concepts

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2. The Shopper Understanding

Checklist
Demographics
Households smaller household size
Modern Lifestyles

Economics
Consumer confidence, changes in income

Consumer tastes
Technology adoption
Time Savings = convenience

Trade Marketing : key concepts

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Customer proposals should be shopper based

customer where to play choices
N (number) = total number of available shoppers in the catchment area
P (penetration) = percentage of available shoppers purchasing in the store
F (frequency) = average frequency with which a captured shopper purchases
products in the store
B (basket) = average amount in value of the shopping basket paid for by
captured shoppers

(NxP)x(FxB) = Total Store Revenues

(P)

Trade Marketing : key concepts

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Types of Shopper Research Data

Shopper I

Shopper II

Household Panel Data

Questionnaire

What shoppers do !
Trade Marketing : key concepts

Why shoppers do !

Types of Shopper Research Data

Shopper I - Household panel data

WHO, WHAT, WHERE and HOW

Shopper II - Questionnaire
WHY are purchases done at the retailer x or y
Information in overall store & category level
Trade Marketing : key concepts

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Shopper I

How to drive the retailers value share ?

Value Share
=
Penetration

% of households who
purchased the category
at the store in P12M.
On category level, this
needs to be adopted by
the category penetration.

Trade Marketing : key concepts

Loyalty
% of requirement in a
category which shoppers
of the store cover in this
store.

Spending Index
Total spending of shoppers
of a certain store vs.
average spending per
household

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Shopper I

Definitions

Penetration
number of households having bought at the retailer
total number of households in the country

Loyalty
spent by the shopper of the retailer at that retailer
spent by the shopper of the retailer on at all retailers

Spending Index
spent by the shopper of the retailer at all retailers
spent by the shopper of the country at all retailers

Trade Marketing : key concepts

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Shopper I

How to grow the retailers business ?

1. Attract more shoppers to the stores
2. Increase spending of the shoppers

Increase spending of
current shoppers

Attract bigger spenders

Come more often

Spend more per trip

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Shopper I

Closure Rate - Example

Shoppers of Dentifrice at Schlecker Germany

Indicates how successful a retailer is in

making his shoppers, who regularly
buy the category, buy the category in
his stores.

All Shoppers
37,480,995
Store
Shoppers
21,944,940
59 %

Non Buyer of
Category
2,342,779
6%

Closure Rate:

Buyer of
Category
8,518,173
23 %

Only in
Store
1,205,118
3%

Also
elsewhere
Elsew
here
7,313,055
20 %

Exclusiv
Shoppers

Sw itcher

Non Shopper
of Store
15,536,056
41 %

Buy Category
but no in Store
11,083,988
30 %

Buyer of Category
die WG
13,551,427
36 %

Missed
Opportunities

Non
Custom ers

Non Buyer
of Category
1,984,628
5%

43.5% of Category Shoppers which shop within the store, also buy the category in the store

% =
Trade Marketing :43.5
key concepts

23 / (23+30)

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Shopper II

Shopper II - Store and Category

Positioning
Used for why people shop there
gather expectations and measure how well each
customer is scoring versus these expectations,
i.e.
the satisfaction that shoppers are recognising in
the customer/store.

Trade Marketing : key concepts

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3. The Category Understanding

Category role
Current data / trends
Opportunities

Marketing Mix

Trade Marketing : key concepts

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Marketing mix - WHAT DOES IT MEAN

for below the line activities?
For each category understand and track the SALES FUNDAMENTALS
DISTRIBUTION
PRICING
SHELF/MERCHANDISING

PROMOTION

Trade Marketing : key concepts

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Sales Fundamentals
Distribution

Price
Shelf (Merchandising)

Promotion

Trade Marketing : key concepts

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SALES FUNDAMENTALS
Distribution
Price
Shelf (Merchandising)
Promotion

It is the availability of a product in a store

Most important Sales Fundamental
Our Brands must be within arms reach of desire
for the consumer
Trade Marketing : key concepts

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SALES FUNDAMENTALS
Distribution
Price
Shelf (Merchandising)

Promotion
Key to making a sale for a Brand
Pricing is at the sole discretion of the retailer
Trade marketing role is to inform retailers of our pricing
corridors and the logic of those
Trade Marketing : key concepts

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SALES FUNDAMENTALS
Distribution
Price
Shelf (Merchandising)
Promotion
Key driver of Superior in-store presence
Market share should be reflected in share of shelf (with
care)
We need to influence our customers to maximize the
visibility of the brands, to a limit
Trade Marketing : key concepts

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SALES FUNDAMENTALS
Distribution
Price
Shelf (Merchandising)
Promotion
Influential vehicle to feature our brands
Instore execution is using the space available for maximum effect
Same focus : Maximize visibility for the brands

Trade Marketing : key concepts

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How: lesecuzione

Il marketing mix

-Sales Fundamentals should create a superior value

proposition for Shopper
- Value for trade should be provided to win in FMOT via
TRADE Marketing

PRICE
PLACE

VALUE FOR
TRADE

VALUE FOR
CONSUMER

PRODUCT

PROMOTION

SUPERIOR VALUE PROPOSITION for Shopper

Trade Marketing : key concepts

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Value for Trade

1. Sales Fundamentals (channel, sizes, promotions)

2. Trade terms (payment, delivery)

3. Shopper marketing / Differentiation
4. TiTuTa (Trade in, Trade up, Trade across)

5. Promotion analysis
6. Pricing sensitivity analysis
7. Lower costs e.g. store operations, shrink

Trade Marketing : key concepts

Trade Marketing
provide value for trade to create a
superior value proposition for
shopper

Trade Marketing : key concepts

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Trade Marketing Plan

How to exploit
1. Map
2. Understand
3. Plan
4. Communicate

Trade Marketing Plan: How to exploit

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1 step : Map
(1) Mapping all retailers where our product are
(could
be)
sold:
Hyper,
Super,...Discount,
Drugstores..Pharmacy .... Gas Station, airport...
(2) How to coverage effectively and succesfully

Trade Marketing Plan: How to exploit

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2 step : Understand
Shopper 1 and Shopper 2
Shopper I

Shopper II

Household Panel Data

Questionnaire

What shoppers do !

Trade Marketing Plan: How to exploit

Why shoppers do !

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2 step : Understand
Key Business Drivers: PHARMACIST - example
Pharmacist Recommendation = #1 Purchase driver!

Specialist endorsement /
recommendation is the key

Established manufacturer and

country of origin: Made in
Europe or Germany is an
additional benefit.

Shoppers demand:
pharmacists tend to
recommend products that are
more often asked by shoppers.
Trust to the product quality:
via personal use or witness of
good results

Price: pharmacists tend to

recommend higher priced
products.

Being touched by brand:

offsite/events/conferences/tra
inings/ organized by brand
where there is food served
and sometimes an
entertainment as well.
Understanding the
technology: They claim they
trust more products they have
information about
(technology).

Key arguments that pharmacists use for shoppers: I tried it, consumers like it, it has positive
feedbacks, specialists recommend it.

Trade Marketing Plan: How to exploit

Source: How to leverage the power of Pharmacist recommendation Russia 2011

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2 step : Understand

Sales Fundamentals

Trade Marketing Plan: How to exploit

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EXAMPLE Sales Fundamentals In Drug Specialist Product x was

supported by SFT better than top trade (Super+Hyper)

50.0

49.0

45.1

45.0

43.5

39.1

40.0

43.0
39.2
Drug Sp.
Super+Hypers

35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0

Share of Products Share of Facing

Share of Shelf

Source SFT

Trade Marketing Plan: How to exploit

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Sales Fundamentals Target -example

3Months
Ending Feb

Target CY

index

PRIORITY #1

AVG N OF PRODUCT

10.9

12.0

110

PRIORITY #2

SHARE OF SHELF

13.6

15.0

110

PRIORITY #3

WD DISPLAY

11.4

15.0

132

OUT OF STOCK

21.8

15

69

PRIORITY

Positive Building Blocks

Negative Building Blocks

New launch
New Ideal Assortment
Single cases vs mixed cases (OOS)
Corporate Promotion

Code change in Q1
Single cases vs Mixed cases (avg n.productss)

Trade Marketing Plan: How to exploit

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All decisions about shelf, assortment and pricing are at the sole discretion of the Retailer.

3 step : Trade Marketing Plan

Prepare your proposal

Trade Marketing Plan: How to exploit

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3 Step: Plan
Trade Marketing Plan key elements to include

Sales Fundamentals (Assortment, Price, Promotion, Shelving)

Category Management

Commercial Innovation

Launch & Initiative Management

Customer Differentiation and Shopper Marketing

Business Plans
By channel, customers
By period of time (canvass, season...)

Trade Marketing Plan: How to exploit

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1. Sales Fundamentals
The basics on how to grow SHOPPER DEMAND
1. Distribution
Right assortment, timings,...

2. Shelving
Blocks (vertical/horizontal), signposts, information,...

3. Pricing
Hi/Low, EDLP,

4. Promotion
Frequency, Displays, Communication,

Trade Marketing Plan: How to exploit

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2. Category Management
How can the category best contribute to help
the retailer differentiate & meet their overall
objectives & strategies.
Analysis of :

- Market Development
- Category (retail & brands)
- Assortment (ABC-Analysis,..)
- Price & Promotion
- Shelving / Planograms
- Shopper Data

Trade Marketing Plan: How to exploit

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3. Launch & Initiative Management

How to optimize the implementation of new initiatives
by making use of further marketing & sales tools.
Examples:

- Sampling & Trial Activities

- Awareness - Instore Advertising, New
Media (Internet coupons,..)
- PR / Emotion - Events

- ......

Trade Marketing Plan: How to exploit

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4. Customer Differentiation
How to grow the retailers business through choices
which make him win over competition; how do
manufacturers fit into that plan.
Examples:

- Customer specific SKUs

- Restricted distribution of a brand (???)
- Unique Marketing activities

-.....

Trade Marketing Plan: How to exploit

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4. Customer Differentiation
Factors of the Value Share impacting the Use of Tools
1.

Penetration:

2.

Share of Requirem./Loyalty

3.

Spending Index

Trade Marketing Plan: How to exploit

Classic Media, Outdoor

Posters, Flyers around store,..

Instore Communication,
Store Loyalty Tools, Displays,
Posters, Instore Media,
(New) Media, Events, new
assortment,

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5. Shopper Marketing
Identifying the right shopper marketing strategies

(campaigns, store reinvention, relations, POS claims) that

can deliver a win/win with the retailers

Campaigns

Shopper Based Design

Trade Marketing Plan: How to exploit

POS Claims

Relationship Mktg

6. Joint Business Plans

How to grow the retailers and manufacturers
business by a joint, longer-term business plan.
Finding the sweet spot:

Brand Opportunities

Retailer Opportunities
Sweet
Spot

Building our business through building their business

(the idea behind Customer Business Development!)
Trade Marketing Plan: How to exploit

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Trade Marketing plan - customer x

2) Specific plans by Customer: Customer x (5.6%)

Nov

Dec

Jan

Feb

Mar

Apr

May

Ideal Assortment

30 M Eur
Multibuy with Gadgets
30 M Eur

Shopper Marketing

2000/10 M Eur

4000/20 M Eur
Displays

120 M Eur
Supporto nuovi lanci

June

4 step : Communicate
the trade marketing plan

Trade Marketing Plan: How to exploit

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Communicate the trade marketing plan

-> to Drive execution in store
Trade Marketing Manager
Drives brand sales via a better presence in store
(by customer, area, channel)

Store Development Organization Account

HOW to communicate ?
Trade Marketing Plan: How to exploit

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Communicate the trade marketing plan

-> to Drive execution in store

Meeting / Canvass (national, area, customer...)

Written communication (word, ppt,...)
Guidelines/priorities
Face-to-Face meeting (direct boss)
Trade Marketing Plan: How to exploit

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