Definition and Benefits of Trade Marketing

What is Trade Marketing
What is Trade Marketing

Trade Marketing is a term that refers to one of the most popular marketing strategies for advertisers and consumers. The literal translation of trade is commerce, and it is applied to the world of marketing to study how the placement of products at the point of sale influences the purchase.

What does it consist of? It is a set of plans and strategies that transform a physical business so that the products it houses have the highest possible level of sale. Convert distribution channels into an attractive space for customers, and at the same time facilitate their shopping experience.

70% of purchase decisions are made at the point of sale, this data is one of the reasons why  trademarketing is so important.

Advantages of Trade Marketing

Thanks to this strategy, sales in establishments improve, where different actions are applied with very marked objectives, they are the following:

  1. Increase the rotation of products in the store.
  2. Coordinate promotions with rigorous planning to improve and accelerate consumption.
  3. Apply merchandising and branding strategies (brand image).
  4. Increase the influx of customers at the point of sale. (more affluence translates into more sales)

Channel Management is crucial for success

One of the most important and distinctive characteristics of trademarketing is that it requires joint action between manufacturers and distributors. Other advertising strategies depend directly on one of the parties, but in this case it is essential to collaborate.

Why is it necessary to carry out joint conceptualization and coordination work? In order to develop an effective strategy that manages to improve consumption and turnover levels, a coherent action is necessary with a common thread that links the point of sale with the suppliers or manufacturers. Only in this way can a greater attractiveness be achieved so that the target audience of the products decides to purchase it.

It is better understood with an example:

Let’s imagine that we are going to place a featured product on sale. To achieve the highest possible number of sales we have chosen a prominent place with a large influx of the target , and we have adjusted the price with the help of an expert in this field. Sales increase considerably but the product sells out too quickly and the spread has not been profitable in the end. That is why it is so important that all the actors involved coordinate in this type of action. If the supplier had been prepared, it would have been able to supply the distributor sufficiently and profits would have skyrocketed.

Attention: all links in the supply chain are vital in Trade Marketing strategies .

Actions

Not all Trade Marketing strategies are carried out in the same way. Actions vary depending on the objectives, some examples of this are:

  • Actions whose objective is to improve the rotation of products / articles at the point of sale. Coordination of offers, discounts or promotions of certain types of articles.
  • Development of merchandising actions to promote a brand.
  • Events or dates that drive the influx of consumers in the usual places of sale.
  • Joint promotional campaigns between the manufacturer and the distributor.
  • Establishment of an effective communication system between the different agents involved in the supply chain. If a problem arises between the consumer and the distributor, or between the latter and the supplier, there must be prompt communication between the parties. In addition, communication must be decisive, otherwise it may reduce the perception of quality or the image of the brand or company. It never hurts to remember that a well-structured complaint resolution system can turn a disgruntled customer into a loyal customer.
  • Actions aimed at enhancing or reinforcing the image of brands or companies.
  • Redefine or improve aspects that are not core, such as packaging. The packaging offers the first impression of a product, is not a major element but with ability to influence. Presence adds value to brands and can even boost demand for certain types of products.
  • Improve the logistics structure. It is a factor that directly affects the fulfillment of the correct delivery dates, time and place. It is more related to online commerce than to sales at physical points, but it is still of great importance.

Keys to success

We are in a highly competitive scenario, where the various distribution channels and media tirelessly fight for the top spot. In addition, we live in a consumer context where it is increasingly difficult to retain a customer.

Why? Today consumers have more information than ever to compare products or services and there is also a great diversification in the offer.

How can you win in this context? Making a campaign design thought and tied. It is the only way to achieve satisfactory results.

The formula for success is never written, but here are some tips on what not to do. Never propose short-term strategies.

  • It should always be a continuous plan with a projection over time. Distribution support is never done without a clear strategic approach. What is the end goal? Taking action in isolation is meaningless.
  • Most of the time, consumers’ reaction to different actions is studied and those that do not work are adjusted or eliminated. Not measuring results is unthinkable.
  • Make sure you have a performance measurement plan in place. Without it there is no way to record the evolution of the strategies, nor information to know how to modify them.
  • The Trade Marketing works driven by linking all parts of the chain, as we noted at the beginning. Applying actions within a global image of the company should be considered.

Many actions without a direct relationship with trademarketing do influence its effectiveness. On the other hand, if a link of significance is worked between all the advertising measures, it is easier to analyze profitability and the fulfillment of objectives.

History of Trade Marketing

Its history dates back to shortly before the 21st century. 25 years ago is when these types of promotions began to be applied for large retailers. Throughout the 1990s, it became relevant with the fragmentation of traditional media and the consolidation of the retail business. Marketing research at the time sought to develop and carry out activities to promote sales at the point of purchase.

The emergence of trademaketing led to changes in the marketing departments on the one hand and sales on the other. Budgets for one or the other department vary between companies. Large account managers ( Key Account Manager ) are in charge of maximizing the client portfolio and supporting them within the manufacturing company. On the other hand, there is the Category Administrator, who manages the brand and all its references within certain categories: develops strategic plans for product lines, manages the relationship with the manufacturers of that line and organizes the internal process at the distribution level .

The balance between the decisions of both directly influences what we buy as consumers. New trends or products depend on its ability to innovate or locate needs that we can finally see on the shelves of stores or department stores.

Vital points of trademarketing

  1. Assortment
  2. Price
  3. Promotion
  4. Visibility
  5. Services

All are relevant points in almost any marketing plan, but they acquire more importance when we talk about Trade Marketing because the link that unites them must also be studied. Once the nexus is established, all points are optimized to increase their potential in the future.

Trade Marketing Conclusions

This branch of marketing seeks to increase demand at the level of the distributor (retailer) and therefore, the consumer. In the equation, it does not erase this last actor (the consumer) but is also responsible for developing and maintaining strategies focused on increasing the need for this. To make this possible, all kinds of perfectly coordinated intermediate agents intervene. The goal is to persuade the end consumer with rotating products and promotions that move the items like a wheel that never stops. In this way the transactions do nothing but increase and with it the business profit.

If there is a sector that has known how to take advantage of Trade Marketing, it is undoubtedly textiles. The retail industry, whose greatest exponent is Inditex, is a perfect example of how to apply this type of strategy. The multinational Amancio Ortega not only has one of the most advanced logistics systems in the world, but its channel management allows an item to be available to any consumer in less than two days. We hope you liked this article. We wait for you in the next post with more and better quality information about the world of marketing.