Trade Marketing. Trade Marketing Plan: How to exploit Map Understand Plan Communicate
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1 Trade Marketing 1
2 Trade Marketing 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
3 Trade Marketing : what is it? Trade marketing is the application of marketing techniques to Retailers to reach/win with Shopper 3
4 Consumer vs Shopper Consumer = person with needs Shopper = person that buys 4
5 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
6 MOMENTS OF TRUTH Zero First Growth Second 6
7
8 Win in the First Moment of Truth is crucial TRADE MARKETING and Sales Organization manage the FMOT 8
9 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 9
10 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 10
11 CHANNEL, CUSTOMER, SHOPPER, CATEGORY UNDERSTANDING 11
12 1. The Channel/Customer Understanding Checklist 1. What are your organizations overall business objectives, goals and strategies? 2. What do you see as your primary competitive advantage? What are your core competencies? 3. How has your organization delivered against your organizational objectives in the past? 4. How would you describe the culture of your organization? What are the strengths/weaknesses of this culture? 5. Etc 12
13 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 13
14 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) 14
15 Types of Shopper Research Data Shopper I Household Panel Data Shopper II Questionnaire What shoppers do! Why shoppers do!
16 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 16
17 Shopper I How to drive the retailer s value share? Value Share = Penetration x Loyalty x Spending Index % of households who purchased the category at the store in P12M. On category level, this needs to be adopted by the category penetration. % of requirement in a category which shoppers of the store cover in this store. Total spending of shoppers of a certain store vs. average spending per household 17
18 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 18
19 Shopper I How to grow the retailer s business? 1. Attract more shoppers to the stores 2. Increase spending of the shoppers Attract bigger spenders Increase spending of current shoppers Come more often Spend more per trip 19
20 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 Non Shopper Shoppers of Store 21,944,940 15,536, % 41 % Non Buyer of Buyer of Buy Category Buyer of Category Non Buyer Category Category but no in Store die WG of Category 2,342,779 8,518,173 11,083,988 13,551,427 1,984,628 6 % 23 % 30 % 36 % 5 % Only in Also Store Elsew elsewhere 1,205,118 7,313,055 3 % 20 % Exclusiv Sw itcher Missed Non Shoppers Opportunities Custom ers Closure Rate: 43.5% of Category Shoppers which shop within the store, also buy the category in the store 43.5 % = 23 / (23+30) 20
21 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. 21
22 3. The Category Understanding Category role Current data / trends Opportunities Marketing Mix 22
23 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 23
24 Sales Fundamentals Distribution Price Shelf (Merchandising) Promotion 24
25 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 25
26 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 26
27 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 27
28 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 28
29 VALUE FOR CONSUMER 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 PRODUCT PRICE PLACE PROMOTION VALUE FOR TRADE SUPERIOR VALUE PROPOSITION for Shopper 29
30 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
31 Trade Marketing provide value for trade to create a superior value proposition for shopper 31
32 Trade Marketing Plan How to exploit 1. Map 2. Understand 3. Plan 4. Communicate Trade Marketing Plan: How to exploit 32
33 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
34 2 step : Understand Shopper 1 and Shopper 2 Shopper I Household Panel Data Shopper II Questionnaire What shoppers do! Why shoppers do! 34 Trade Marketing Plan: How to exploit
35 2 step : Understand Key Business Drivers: PHARMACIST - example Pharmacist Recommendation = #1 Purchase driver! Specialist endorsement / recommendation is the key Trust to the product quality: via personal use or witness of good results 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. 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
36 2 step : Understand Sales Fundamentals Trade Marketing Plan: How to exploit 36
37 EXAMPLE Sales Fundamentals In Drug Specialist Product x was supported by SFT better than top trade (Super+Hyper) Drug Sp. Super+Hypers Share of Products Share of Facing Share of Shelf Source SFT Trade Marketing Plan: How to exploit 37
38 Sales Fundamentals Target -example 3Months Ending Feb Target CY index PRIORITY #1 AVG N OF PRODUCT PRIORITY #2 SHARE OF SHELF PRIORITY #3 WD DISPLAY PRIORITY OUT OF STOCK Positive Building Blocks New launch New Ideal Assortment Single cases vs mixed cases (OOS) Corporate Promotion Trade Marketing Plan: How to exploit Negative Building Blocks Code change in Q1 Single cases vs Mixed cases (avg n.products s) All decisions about shelf, assortment and pricing are at the sole discretion of the Retailer. 38
39 3 step : Trade Marketing Plan Prepare your proposal Trade Marketing Plan: How to exploit 39
40 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
41 1. Sales Fundamentals The basics on how to grow SHOPPER DEMAND 1. Distribution Right assortment, timings, Shelving Blocks (vertical/horizontal), signposts, information, Pricing Hi/Low, EDLP, 4. Promotion Frequency, Displays, Communication, Trade Marketing Plan: How to exploit 41
42 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
43 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
44 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
45 4. Customer Differentiation Factors of the Value Share impacting the Use of Tools 1. Penetration: Classic Media, Outdoor Posters, Flyers around store,.. 2. Share of Requirem./Loyalty Instore Communication, Store Loyalty Tools, Displays, Posters, Instore Media, 3. Spending Index (New) Media, Events, new assortment, Trade Marketing Plan: How to exploit 45
46 Trade Marketing Plan: How to exploit 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 POS Claims Shopper Based Design Relationship Mktg
47 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 Trade Marketing Plan: How to exploit Building our business through building their business (the idea behind Customer Business Development!) 47
48 Trade Marketing plan - customer x 2) Specific plans by Customer: Customer x (5.6%) Nov Dec Jan Feb Mar Apr May June Ideal Assortment Multibuy with Gadgets 30 M Eur Shopper Marketing Displays Supporto nuovi lanci 30 M Eur 4000/20 M Eur 2000/10 M Eur 120 M Eur
49 4 step : Communicate the trade marketing plan Trade Marketing Plan: How to exploit 49
50 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
51 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
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