Trade marketing is the set of marketing strategies aimed at the trade (commercial intermediaries), i.e., distributors, wholesalers, and retailers.
Trade marketing often includes activities such as negotiating with distributors for the introduction of new products.
The companies in Large Scale Retail Trade (GDO) often require from the producer a listing fee (a compensation demanded by retail chains for adding products to their assortment). The costs related to the listing fee are borne by the producer and are defined as trade spending.
Trade spending includes costs for communication tools, for promotions and merchandising used in the point of sale.
What are the trade marketing levers?
There are eight marketing levers that develop the most effective trade marketing strategies:
- Sales conditions: the company creates price lists that change depending on the distributor and plan sales with the aim of optimizing the production and sales cycle of a product;
- Trade promotion: where discounts, prizes, and other incentives are granted for achieving high sales volumes. Thanks to trade promotion, retailers are more encouraged to purchase products from the company and to give them greater visibility to reach predetermined sales targets;
- Products: a selection of items is made and solutions for introducing them to the market are evaluated;
- Co-marketing (cooperative marketing): these are partnership activities, in promotion with below the line (loyalty programs, flyers) and above the line (traditional advertising campaigns);
- Sales Management: once the strengths of one's company are understood, one can plan the best sales strategy;
- Trade Training: it is important to have a broad knowledge of the market, the company, and its products so as to prepare the trade to handle the distribution process part;
- Partnership: the retailer is considered a long-term partner, to succeed in customer loyalty and encourage them to purchase;
- Logistics: delivery strategies and management of product flow from the company to the points of sale.
Every strategy must be able to achieve two objectives:
- Strategic Objectives: these are concerned with the positioning of the company, aiming to change the conduct of the trade;
- Operational Objectives: these are focused on increasing the company's market share in the distribution channel to ensure additional revenues for the company.
To achieve these objectives, it is important to manage resources and production and distribution times as efficiently as possible and that companies are always satisfied with the chosen wholesalers.
Where is trade marketing applied?
Trade marketing is the art of marketing specific products for businesses. Individual consumers take a back seat. This type of business-to-business activity has other businesses as target clients.
Normally, the main goal of a Trade marketing campaign is to sell products to other companies which will then sell them to their specific customers.
The purpose of this type of marketing differs from traditional marketing as it is not focused on the final sale. Instead, it concentrates on the means by which the final sale is made.
Who uses Trade marketing?
For an effective trade marketing strategy, it's important to know how to best leverage resources:
- At trade shows: a perfect place to carry out Trade marketing activities, showcase the product and attract consumer attention;
- Through commercial promotions: these include coupons, bulk deals, and other purchase incentives that are aimed at consumers and are a sure way to distinguish your brand from the competitor;
- In advertisements: through traditional and online advertising, an excellent trade marketing strategy can be established. Advertisements are very effective for brand recognition. The more people see your name, the more power the company will have in the market.
In conclusion, this type of marketing strategy is very important for companies that want to focus sales in physical locations. Companies rely on Trade Marketing to demonstrate the advantages of their brand to producers who in turn help sell the product to the end consumer.
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