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Trade Marketing
Trade Marketing 1 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 2 Trade Marketing : what is it? Trade marketing is the application of marketing techniques to Retailers to reach/win with Shopper Trade Marketing : key concepts 3 Consumer vs Shopper Consumer = person with needs Shopper = person that buys Trade Marketing : key concepts 4 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! 5 Trade Marketing : key concepts MOMENTS OF TRUTH Zero First Growth Second Trade Marketing : key concepts 6 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 8 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 9 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 10 CHANNEL, CUSTOMER, SHOPPER, CATEGORY UNDERSTANDING Trade Marketing : key concepts 11 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 12 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 13 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 14 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 16 Shopper I How to drive the retailer’s value share ? Value Share = Penetration x % 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. x Spending Index Total spending of shoppers of a certain store vs. average spending per household 17 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 18 Shopper I 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 19 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) 20 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 21 3. The Category Understanding • Category role • Current data / trends • Opportunities • Marketing Mix Trade Marketing : key concepts 22 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 23 Sales Fundamentals Distribution Price Shelf (Merchandising) Promotion Trade Marketing : key concepts 24 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 25 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 26 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 27 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 28 How: l’esecuzione 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 29 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 31 Trade Marketing Plan How to exploit 1. Map 2. Understand 3. Plan 4. Communicate Trade Marketing Plan: How to exploit 32 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 33 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 ! 34 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 35 2° step : Understand • Sales Fundamentals Trade Marketing Plan: How to exploit 36 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 37 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.products’s) Trade Marketing Plan: How to exploit 38 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 39 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 40 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 41 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 42 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 43 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 44 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,… 45 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 47 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 49 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 50 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 51
