How to make Trade Marketing more strategic – part one

Trade Marketing has always been a bit of a strange function. It still defies a clear definition (if anyone can make sense of the , please help!), despite being in existence for decades. The official role it plays varies across companies. And there is always a significant variance between the role trade marketing is supposed to play and the role it actually plays. At engage, we train and work with thousands of trade marketers, many of them super-smart, and many of them frustrated. Why? They want to play a more strategic role in the organization. Even those that would call themselves strategic desire to play a bigger, more strategic role. What is the strategic role trade marketing should play, and what is preventing trade marketing functions and trade marketers taking that more strategic role?

What strategic role could Trade Marketing play?

Before we go on, let’s be clear. Trade Marketing doesn’t have to play a strategic role. But there is a strategic role that Trade Marketing can play, and is well positioned to do so. In most consumer goods organizations there is a need to take brand plans, and configure activity at retail to support those plans. That is, broadly speaking, what Trade Marketing teams do. Whether or not it is strategic depends on how that is done. A strategic Trade Marketing function would take (or develop) a deep understanding of the target shopper behind any brand plans, and use this to tune the organization’s channel strategy – to decide which outlets and channels are key to unlocking which brand opportunities. That understanding of shoppers and channels is then used to understand which activities (in which stores) would be most effective in driving purchase and consumption in line with brand goals. This in turn is used to guide retail trade investment. In this way a strategic trade marketing function connects consumer marketing strategy to retail customer strategy.

In our experience this strategic ‘link’ is key to consumer goods success. There are of course other ways of making this strategic link. The creation of a shopper marketing function may be one. But we’ve helped many organizations create a more strategic trade marketing function to facilitate this. So what typically stops this happening?

Why isn’t Trade Marketing more strategic?

There are many reasons (which is why this blog is part of a two-part series): there is a requirement for better shopper research, shopper insight, changes to the organization and capability building within Trade Marketing as well as elsewhere in the business. But there is one, much bigger barrier that comes up again and again. Trade Marketing teams are sometimes too busy to be more strategic. And that is because they are too busy managing promotions.

Managing too many promotions holds Trade Marketing back

Trade Marketers: A question. How much of your time do you spend managing, selling, negotiating, arranging, preparing, fire-fighting around promotions? I ask the question on a relatively frequent basis at events, seminars and workshops. Many of the individuals in these departments spend up to 70 percent of their time on managing promotions. Even in organizations where Trade Marketing teams are already quite strategic, their role is limited by the amount of time tied up on promotion related activities.

The consumer goods industry spends a small fortune on promotions. Discounts and fees for displays and mailers, printing materials and special packaging all add up to a huge amount with dubious returns for the brands that typically pick up the bill. But that isn’t the worst of it. The true cost, and perhaps the biggest cost is the opportunity cost of all that lost time. What could these managers have been doing with their time if they were managing short-term, tactical, often unprofitable activity?

The first step towards Strategic Trade Marketing

In any change management effort there is a need to accept that if a team is going to start doing something new, then they will need to stop doing something else or do it a lot less, at least! Fortunately in the case of Trade Marketing there is a perfect activity to spend less time on – promotions.

And no, I’m not saying that organizations should immediately stop all promotional activity – that would be foolhardy (if not impossible). But a commitment to do less, to simplify, to reduce the time and money spent in this area is the first step to moving Trade Marketing teams towards a more strategic role. If Trade Marketers are spending up to 80 percent of their time on these activities, even a small shift would create a lot more time to add more strategic value to the organization.

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