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Trade Marketing
Trade Marketing : what is it?
Trade marketing is the application of marketing
techniques to Retailers to reach/win with shopper
Key differences between shoppers & consumers:
SHOPPER MINDSET
CONSUMER MINDSET
Active Intent &/or Direct Ability to
make a purchase
User of a product category
“An active intent to
purchase a product
within a category
and/or the direct ability
to transact (make a
purchase) creates a
SHOPPER.”
vs.
“A need or desire to
use a product within a
category creates a
CONSUMER.”
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) - we have spent decades understanding consumers and
their needs and wants, in order to provide the right products to meet those needs and wants.
This includes studying and understanding the consumer when they use our products.
We must win at FMOT before a
shopper can become our consumer!
4
MOMENTS OF TRUTH
Zero
First
Growth
Second
Customer Business Development
Win in the
First Moment of Truth is crucial
Sales Organization manages the
FMOT
Shopper Understanding
Consumer = person with needs
Shopper
= person that buys
Shopper Understanding is the key to success
Marketing Activities
• “Above the line« (ZMOT) marketing activities to
consumers and shoppers as advertising on air, print,
internet, outdoor, social media, trial campaign
• “Below the line" (FMOT) marketing activities to
retailers for shoppers: folders, in store promotion,
fidelity program,collections, in-store visibility, display,
comarketing....
Largo
Consumo
50/50
“Below the line" (FMOT) marketing activities to retailers for shoppers: folders, in store
promotion, fidelity program,collections, in-store visibility, display, comarketing....
For the Channel
Customer
For the Shopper
For what?
Creating Value
For the Category/
Brand
Trade Marketing - 5-Step approach
Step 1: Category/Product understanding
• Sales Fundamentals
Step 2 : Channel/Trade understanding
• “Mapping” all retailers where our product are (could be) sold
Step 3 : Shopper understanding
• Analyze shopper behaviours
Step 4 : Prepare your plan
• Trade marketing plan
Step 5 : Sell It!!!
1. The Category/Product
• Category role (internally and externally)
• Sales Fundamentals
• Value for trade
SALES FUNDAMENTALS
Distribution
Price
Shelf (Merchandising)
Promotion
• It is the availability of a PRODUCT in a store
• Most important Sales Fundamental
• Brands must be within “arms reach of desire” for
the consumer
Sales Fundamentals
Share of PRODUCTS
Full range distribution:
• Singlepacks / valuepacks, mainline & premium, new products
SALES FUNDAMENTALS
Distribution
Price
Shelf (Merchandising)
Promotion
• Key to making a sale for our Brands
• Pricing is at the sole discretion of the retailer
• Key role is to inform retailers of our pricing corridors and the
logic of those
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 maximise the
visibility of our brands, to a limit
Sales Fundamentals
Share/Quality of SHELF
• Share of Shelf in line with volume share
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 : Maximise visibility for our brands
Sales Fundamentals
Share of Display
• Fair share on displays /right position
How: l’esecuzione
Il marketing mix
...let’s look at the marketing mix in a different way!
PRICE
PLACE
VALUE FOR
TRADE
VALUE FOR
CONSUMER
PRODUCT
PROMOTION
SUPERIOR VALUE PROPOSITION for Shopper
Value for Trade
1. Mix (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
2. The Channel/Customer
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 Channels Mapping
(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
DISTRIBUTION – Italian Trade Structure
Hyper :
area >2,500
m²
Super :
area between
400
m²
and
2,500 m²
Discount :
area
600/1000
m²
3. The Shopper Understanding
• Current data (penetration, closure rate, spending index…)
• Opportunities (more shopper, more value, more volume..)
• In-store / Out of store activity (How…)
Consumer demand
Some rapid changes in consumer behaviour
• Demographics
– Households – smaller household size
– Modern Lifestyles
• Economics
– Consumer confidence, changes in income
• Consumer tastes
– Technology adoption/online
– Time Savings = convenience
– Price Paradox
• The wealthier I get the more I want to allocate to fun AND the less I want to
allocate to standard retail….
Consumer Trends
• Declining Household Size
• Flat/Declining Incomes
• Ageing Population
• Large Population Shifts
• Spending Less on Grocery
• Pressure/Less Time
• Look for Simplification
Why are shoppers so important ?
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)
How to drive the retailer’s 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.
x
Loyalty
% of requirement in a
category which shoppers
of the store cover in this
store.
x
Spending Index
Total spending of shoppers
of a certain store vs.
average spending per
household
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
How to grow the retailer‘s 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
Types of Shopper Research Data
Shopper I
Shopper II
Household Panel Data
Questionnaire
What shoppers do !
Why shoppers do !
Types of Shopper Research Data
• Shopper I - Household panel data
WHO, WHAT, WHERE and HOW
• Shopper II - P&G Questionnaire
WHY are purchases done at the resp. retailers
Information in overall store & category level
4° step : Prepare
the Trade Marketing Plan
Trade Marketing Managers tools
•
Sales Fundamentals (Assortment, Price, Promotion, Shelving)
•
Category Management
•
Commercial Innovation
•
Launch & Initiative Management
•
Customer Differentiation and Shopper Marketing
•
Joint Business Plans
> Elements based on level of alignment with customer
1. Sales Fundamentals
The basics on how to grow Consumer Demand
1. Distribution
Right assortment, timings,...
2. Shelving
Blocks (vertical/horizontal), signposts, information,...
3. Pricing
Hi/Low, EDLP,…
4. Promotion
Frequency, Displays, Communication,…
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
3. Launch & Initiative Management
How to optimize the implementation of new initiatives
by making use of further marketing & sales tools.
Examples:
- Sampling & Trial Activities – Sales ladies
- Awareness - Instore Advertising, New
Media (Internet coupons,..)
- PR / Emotion - Events
- ......
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
-.....
4. Customer Differentiation
Factors of the Value Share impacting the Use of Tools
1.
Penetration:
2.
Share of Requirem./Loyalty
3.
Spending Index
Classic Media, Outdoor
Posters, Flyers around store,..
Instore Communication,
Store Loyalty Tools, Displays,
Posters, Instore Media,…
(New) Media, Events, new
assortment,…
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
POS Claims
Relationship Mktg
6. Joint Business Planning
Shopper Based Value Creation
output = Customer JBP
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!)
«Customer» Marketing Plan
Focus on
(
...
...which
tools
1. GROW
– Diffusori elettrici (monofragranza e 3volution)
– Car (clip on)
2. MANTAIN:
– Batteria (Renov’air)
– Continuous Not energized /Gel (Crystal Gel)
– Aerosol (Spray)
– Toilet/tavolette WC(Flush)
1.
2.
3.
4.
5.
6.
Trial plan
Visibility plan
Distribution plan
Stocking/Destocking plan
Shelving
Golden shopper/fidelity tools
*le scelte assortimentali sono a esclusiva discrezione del rivenditore; le proposte assortimentali sono basate sullo studio dello shopper di canale
Customer Marketing Plan - How
2) Specific plans by Customer: Acqua & Sapone
Example
Nov
Dec
Jan
Feb
Mar
Apr
May
Folders/ TPR
Multibuy with Gadgets
Shopper Marketing
CRM/ Media in
store/ coupon from
shelf/ gadget...
To be filled
Displays
HOME+CAR
Co-Marketing
Pre-filled
June
How - De-stocking Plan
Key Tools for extra visibility by channel
MiniDisplay for HFS
Example
To be filled Displays for Drug Stores
How - Sales Fundamentals Enhancer
Key Tools for shelf fixturization
•
•
•
Shelf Trays
Clip-strips
Dispenser for cross-visibility/ secondary placement
Example
How - Sales Fundamentals Enhancer
Extra visibility: first execution
• Check Out Secondary Placement
Example
How - Sales Fundamentals Enhancer
Extra visibility: first execution
• Display
Example
• Multi location
How - Sales Fundamentals Enhancer
Extra visibility: first execution
• Folder /fidelity card program
Example
5° step : Communicate
your plan
Communicate your plan
-> to Drive execution in store
Trade Marketing
Manager
Shopper Based
Design account
• Drives brand sales via a
• Drives Category* and brand
better presence
in stores (FMOT)
sales via a more shopper
based category retail mix
Communicate your plan
-> to Drive execution in store
Store Development Organization Account
• Drives P&G sales via a better presence in
store (by customer, area, channel)
Communicate your plan
-> to Drive execution in store
HOW ?
Trade Marketing
Manager
Shopper Based
Design account
Plan
Store Development Organization Account
Communicate your plan
-> to Drive execution in store
How
• Meeting / Canvass (national, area, customer...)
• Written communication (word, ppt,...)
• Guidelines/priorities