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Why does Trade Marketing not work for some companies?


We recently worked with a client who asked us for a full assessment and possible reorganization, if necessary, of their Trade Marketing function.


The Management felt that the Trade Marketing team was not working, delivering added value or generating the expected return and that, additionally, the alignment with the Consumer Marketing department was quite limited.


The first thing we did was to understand from the different angles (Marketing, Sales and Trade Marketing) what was the role, both real and expected, of Trade Marketing and how and when they should generate value. Later we seek to understand what information, studies, management and operational processes, practices, tools, among others, they had to carry it out.


Additionally, we evaluate the actual skills and abilities that exist in the function to carry out the expected work. And finally, we talk to customers to have an external and comparative opinion with other competitive companies.


The results obtained were very similar to those we have achieved in many organizations. We will try to summarize the main findings, which are usually the fundamental factors that limit superior performance due to misalignment and poor understanding between Consumer and Trade Marketing.


Limited knowledge of the Consumer and much less of the Shopper


Perhaps one of the most common findings is the little knowledge about the Consumer that exists in many Trade Marketing organizations. It seems that for some companies this information (market studies, results, Insights, etc.) is reserved for Marketing. "That is very confidential," someone tells us.


Despite the fact that most of the Trade Marketing departments have been assigned, albeit partially, the function of "Shopper Marketing", there is much ignorance of habits, behaviors and occasions of purchase and consumption of the different categories.


Consumer Marketing begins with knowing the consumer. Trade and Shopper Marketing… too. If Consumer Marketing seeks to influence or change consumer decisions in one way or another, the actions to identify and influence the Shopper derive, to a large extent, also from the consumer.


For example: If my category is complementary and/or there is a high correlation of consumption with another, Trade Marketing should seek to unite them in some way at the points of sale. If, on the contrary, the category has another substitute in a certain segment of consumers, it is better to seek to separate them in the stores.


Limited knowledge of the strategy of the categories and strategic brands


In order for Trade Marketing to develop a differentiated value proposition, it is essential that it knows the current situation of the brand and what is expected of it in the future. That is, not only does Trade Marketing need to know if the brand has a trial or loyalty problem, for example. You must also know what the specific objectives of the brand are, what the strategy is, who the target consumer is and what the desired positioning is, among other things.


But the reality is that we have some Trade Marketing teams that are very far from knowing this information. "That is even more confidential."


If Trade Marketing does not know in depth both the Consumer and the objectives and strategies of the brand categories, there is little it can do to increase purchases and consumption of the same. They are units that end up carrying out isolated activities, more to satisfy the demands of strategic retailers than to generate value for their own business.


The lack of knowledge on the part of Trade Marketing of the Positioning and occasions of consumption that Granola Bars wanted to be given in one of our clients, generated a wrong location of the category in the POS's (it was placed next to the cereals), generating confusion and mistaken perception of the desired moments of consumption (between-meals or snacks).


Weak Planning, Coordination and Evaluation Mechanisms


One of the biggest limiting factors for an adequate integration and alignment between Consumer and Trade Marketing are the non-existent or limited Mechanisms (Management Processes) of Planning, Coordination and Evaluation of Commercial Initiatives.


The lack of discipline, rigor and formalization in the way commercial activities are planned and implemented (and sometimes evaluated), in addition to limiting the chances of success, is the greatest generator of conflict and misalignment between the different commercial functions: Marketing, Trade Marketing and Customer & Account Management.


Non-strategic approach of the Trade Marketing function


Many Trade Marketing organizations have been designed and conceived more to carry out certain tactical or operational tasks such as promoter management, Sell Out actions on products "parked" in customers, merchandising development, among others. However, when we delve into its functions, we detect that there is little that is more strategic:

  • Deep knowledge of the Shopper in the most strategic categories in the different Sales Channels that allows identifying the appropriate incentives and mechanics according to the purchase mission by type of store.

  • Development of a Customer Segmentation Model based on the Shopper that allows identifying the most strategic stores in the entire universe.

  • Extensive knowledge of the needs of strategic customers.

  • Channel/Category and Key Account Plans that comprehensively address the situation and objectives of the brands with the existing opportunities at the level of Shopper, Channels and Clients.

  • Development of Execution Standards to achieve the Perfect Store.


 

If the above is not present in the organization, it is unlikely that Consumer and Trade Marketing can align to generate high impact initiatives.


And perhaps the most relevant of all this is that by not having the correct responsibilities assigned to the function, it is most likely that we will not have the Trade Marketing team with the necessary skills to carry out a work of greater added value.


In conclusion…

It requires, on the one hand, a Trade Marketing team with in-depth knowledge of consumers and brands, and on the other, a function with the necessary responsibilities and skills to translate marketing objectives and strategies into impact initiatives in the strategic channels and clients that maximize the Sell-Out of the brands.


From the organizational point of view, there must be solid Mechanisms (disciplined and formalized) for Planning, Coordination and Evaluation of commercial initiatives.


The healthiest thing to achieve optimal results, once Senior Management detects the problem, is to have a Commercial Consulting team with extensive experience in team alignment.


Need help? Just dedicate 30 min of your time to explain your need and thus be able to propose a job offer.




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