Trade Marketing

When supply can't keep up with demand or demand can't keep up with supply, it's indicative of waste in the form of misallocated capital. 

Trade Marketing Trade Marketing

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Table of contents

    - Hendrith Vanlon Smith, Jr.

    You must have seen some products in a supermarket better placed than others. Why is this the case? Well, it happens when manufacturers give incentives to retailers in the form of commissions or profit margins. It serves as a motivator for retailers to ensure product availability and display. Trade marketing works similarly, and in this explanation, we'll explore the definition of trade marketing, the difference between trade marketing and brand marketing, the strategies and tools used in trade marketing, and provide real-world examples of trade marketing activities. So, if you want to learn how to effectively promote products to retailers and boost sales, keep reading!

    Definition of Trade Marketing

    Trade marketing refers to the strategies and tactics companies use to promote their products or services to retailers, wholesalers, and distributors, to increase their visibility and sales among consumers. It involves developing targeted marketing campaigns, building strong relationships with trade partners, and creating in-store displays and promotions to attract customers.

    Trade marketing is a discipline of marketing that focuses on developing and executing strategies to promote products or services to retailers, wholesalers, and distributors, aiming to increase sales among consumers. Trade marketing involves creating partnerships and building relationships with trade partners, developing targeted marketing campaigns, and creating in-store displays and promotions to attract customers.

    Wholesalers and retailers have many manufacturers as their business partners. Every manufacturer wants optimum results when it comes to product distribution. Therefore, creating product demand amongst the supply chain partners is essential. At the end of the day, these partners ensure product availability to the final customers.

    A manufacturer offers different incentives to create product demand among supply chain partners. These incentives urge wholesalers and retailers to promote the product at their end. It creates a win-win situation for a manufacturer as well as its partners. The manufacturer gets effective product promotion, and partners get better deals.

    A cooking oil manufacturer gives a retailer 10% of revenue as an incentive. It will prompt the retailer to promote the product in the store. They could place the product in an area with maximum customer exposure or directly involve themselves in sales by convincing the customers about its quality and benefits. Ultimately, the retailer will get 10% of its total revenue.

    Incentivizing wholesalers and retailers through profit/revenue margins is common. However, this alone cannot work all the time. Manufacturers must communicate the product value to the partners. For instance, manufacturers can inform retailers about product quality, packaging, and variety.

    Trade Marketing vs Channel Marketing

    Trade marketing is a subset of channel marketing, and it specifically focuses on the activities and strategies used to promote products to retailers and distributors. On the other hand, channel marketing encompasses a broader set of activities aimed at optimizing a company's distribution channels and improving relationships with all channel partners, including wholesalers, retailers, and distributors.

    Trade Marketing vs Brand Marketing

    Trade marketing focuses on promoting products to retailers and distributors, while brand marketing focuses on promoting the overall brand and its values to consumers. Differences between trade marketing and brand marketing are in the table below.

    Trade MarketingBrand Marketing
    • Trade marketing is used in B2B dealings with supply chain partners.
    • Brand marketing is used in dealings related to customers.
    • It creates demand for a product or service amongst the supply chain partners.
    • It communicates brand identity and value to customers.
    • Its purpose is to increase product availability to customers.
    • Its purpose is to develop a loyal customer base.
    • A company incentivizes wholesalers and retailers for product promotion.
    • A company can either carry out brand marketing activities or hire an external agency.

    Table 1 - Trade marketing vs. Brand marketing

    Trade and brand marketing may be different marketing approaches; however, companies can use these two to achieve their marketing and sales objectives. A company can employ brand marketing to develop and communicate the brand image to customers. It will help in promoting the brand to the target audience. Once it can establish a strong brand identity, it can employ trade marketing to create demand for its products amongst the supply chain partners.

    Trade Marketing Strategy

    Businesses can face quite a few problems when it comes to carrying out trade marketing activities. Therefore, developing a trade marketing strategy before starting the campaign is essential. It allows businesses to plan and execute campaigns effectively.

    • Conduct market research – Market research is required before starting the trade marketing campaign. It allows a business to identify the gaps in the market and the problems customers face. The market research stage also helps a business resolve customers' issues through its campaign. Finally, market research helps identify potential problems a business could face from external sources, such as market competition and regulations.
    • Devise a plan – After conducting market research, it is time to devise a plan. In the plan, you set the goals for the campaign, identify the target market, and allocate the resources. Since you already know the gaps in the market and the challenges customers face, you can direct the trade marketing campaign to fill those gaps and present solutions to the customers.
    • Develop the product – At this stage, you already have market information and the plan for your campaign. It is now time to develop the product. You must ensure that the product meets the demands of your target market and provides a unique solution to their problems. Product development has a massive impact on trade marketing as it could allow a business to convince the supply chain partners about the product.
    • Work on branding – We discussed earlier that trade marketing and branding could work wonders for a business. A business must establish a solid and unique brand identity. Strong branding creates a deep connection between a brand and its customers. The company could achieve more revenue and profit when customers are willing to buy its products. Additionally, wholesalers and retailers might be more interested in doing business with established brands.
    • Design the distribution system – In the last stage, it is time to design the distribution system. This system must align with the trade marketing campaign's objectives. A business should identify the regions it wants to cover and bring key partners, i.e., wholesalers and retailers, on board. It should also incentivize these partners to ensure increased product availability. Additionally, there should be a strong sales force that could collaborate with the business's key partners.

    Trade Marketing Market research is one of the pillars of trade marketing StudySmarterFig. 1 - Market research is one of the pillars of trade marketing

    Trade Marketing Tools

    Businesses use different tools to implement the trade marketing strategy effectively. Let's discuss some of the common tools of trade marketing:

    • Customer relationship management (CRM) – Customer relationship management is a business's approach to managing customer relations. It helps keep track of customers' activities and improves communication with them. It gathers data through customer interaction and allows businesses to measure productivity.
    • Email marketing automation system – It is another tool of trade marketing. A business needs to communicate with its partners regularly. Therefore, it is vital to have an email system that ensures effective communication. The partners need to be updated about company plans and policies. The email system is equally important for communication with customers.
    • POS "point of sale" materials - POS refers to the physical location where a transaction takes place, such as a retail store checkout counter. POS materials are marketing materials displayed in this location and designed to influence consumers' purchasing decisions. POS materials include shelf talkers (small signs attached to shelves or product displays), price cards, banners, posters, and product packaging displays. These materials are typically designed to catch the attention of shoppers, highlight the key features or benefits of a product, and encourage consumers to make a purchase.

    Trade Marketing Examples

    A business could employ different ways to execute trade marketing campaigns. Examples of trade marketing activities include:

    • in-store displays,
    • trade exhibitions,
    • trade promotions,
    • strategic partnerships.

    In-Store Displays

    In-store displays are a form of trade marketing that involves creating eye-catching displays of products within a retail store. These displays attract shoppers' attention, generate product interest, and ultimately increase sales. Examples of in-store displays include:

    1. End cap displays
    2. Floor stands
    3. Window displays
    4. Product demos/sampling stations
    5. Interactive displays
    6. Pop-up shops

    Trade Exhibitions

    A trade exhibition is a perfect opportunity for a business to showcase its products. It could create a buzz for the products when done correctly. Businesses can draw attention not just from potential customers but also from potential trade partners. It provides an ideal setting to grow the business network and build fruitful relationships.

    An example is the Consumer Electronics Show (CES), the world's largest consumer electronics trade show. Companies from around the world attend the show to showcase their latest products and innovations, and to network with potential trade partners.

    Trade Marketing Trade exhibition is a vital part of trade marketing StudySmarterFig. 2 - The trade exhibition is a vital part of trade marketing

    Trade Promotions

    As the name suggests, trade promotions are used to promote the trade of products. At first, a manufacturer can incentivize its partners, who then pass it on to the customers. Vendors give free samples and discounts to customers to promote the products.

    An example of this is the partnership between HP and Staples. HP offers Staples customers a discount on HP products when they purchase certain Staples products, which helps to increase sales of HP products and drive traffic to Staples stores.

    Strategic Partnerships

    When two or more brands collaborate to achieve their marketing goals, it is called a strategic partnership. These brands use each other's customer base to enhance their value proposition. In trade marketing, the manufacturer signs an agreement with wholesalers and retailers to form strategic partnerships.

    An example of this is the partnership between Coca-Cola and McDonald's. The two companies have a long-standing partnership that includes co-branded marketing campaigns, such as the iconic "I'm Lovin' It" campaign, which promotes both McDonald's food and Coca-Cola beverages.

    Trade Marketing - Key takeaways

    • Trade marketing is a business-to-business (B2B) marketing approach that creates demand for a product amongst supply chain partners, such as wholesalers and retailers.
    • Incentives urge wholesalers and retailers to promote the product at their end.
    • Trade marketing creates a win-win situation for a manufacturer as well as its partners.
    • Manufacturers must communicate the product value to the partners.
    • Businesses can use trade marketing and brand marketing in tandem to achieve marketing and sales objectives.
    • Trade marketing tools include customer relationship management tools, POS (points of sale) materials, email automation tools,
    • Examples of trade marketing activities include: in-store displays, trade exhibitions, trade promotions, and strategic partnerships.
    Frequently Asked Questions about Trade Marketing

    What is trade marketing? 

    Trade marketing is a discipline of marketing that focuses on developing and executing strategies to promote products or services to retailers, wholesalers, and distributors, aiming to increase sales among consumers. Trade marketing involves creating partnerships and building relationships with trade partners, developing targeted marketing campaigns, and creating in-store displays and promotions to attract customers.

    What is the difference between marketing and trade marketing? 

    Trade marketing is used in B2B dealings with supply chain partners. Whereas, brand marketing is used in dealings related to customers. 

    What is an example of trade marketing? 

    A trade exhibition is an example of trade marketing. 

    What is the role of trade marketing? 

    Trade marketing is used in B2B dealings with supply chain partners. A trade exhibition is a perfect opportunity for a business to showcase its products. It could create a buzz for the products when done correctly. Businesses can draw attention not just from potential customers but also from potential trade partners. It provides an ideal setting to grow the business network and build fruitful relationships. 

    Is trade marketing a B2C or B2B? 

    Trade marketing is B2B. 

    Who uses trade marketing? 

    Manufacturers use trade marketing. 

    What is the role of trade marketing?

    The role of trade marketing is to help companies increase sales by creating and implementing strategies that promote their products to retailers, distributors, and other channel partners.

    Test your knowledge with multiple choice flashcards

    To create product demand among supply chain partners, a manufacturer offers different incentives to them.

    The incentives urge wholesalers and retailers to promote the product at their end.

    ________ creates a win-win situation for a manufacturer as well as its partners.

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