what is trade marketing

what is trade marketing

trade marketing definition

Trade marketing is a business-to-business approach to marketing aimed at satisfying the common economic and strategic interests of producers and distributors.

The final objective of trade marketing is to jointly develop the turnover of both partners (producer and distributor). With this in mind, he is looking for a convergence between the marketing of the distributor and that of the manufacturer. Trade marketing is therefore based on a reciprocal exchange of information allowing both parties to share an additional profit. It applies to a large number of functions such as logistics, product development, merchandising, promotion, research and IT.

The term trade trade marketing was introduced in France in 1983 and is more generally introduced in articles of LSA and Points of Sale in 1991, in a context of domination by distributors towards producers. Faced with this domination, producers then proposed a more constructive relationship through trade marketing.

Producer/distributor relationship

Trade marketing looks at the relationship between producers and distributors in a different way. Indeed, historically, in France, the relationship between industry and commerce has long been conflictual and a source of tension. The ambivalence of the marketing vision among manufacturers and distributors may explain the tensions between them. Indeed, in his work Christophe Chain distinguishes between the vision of the manufacturer corresponding to the marketing of demand, and the vision of the distributor corresponding to the marketing of the offer:

Manufacturer's vision: the manufacturer has the initiative and adapts to the needs of consumers, the distributor simply adapts to the manufacturer's approach

Distributor's vision: the distributor is located in a competitive environment and must attract consumers through its offer. Consumers must adapt to this offer, and the manufacturer must follow the distributor's approach.
From now on, with trade marketing, relations are based on transparency, thus making it possible to develop mutual expertise.

Relationships, through trade marketing, are established according to a win-win principle:

For the distributor: trade marketing offers many advantages such as a reduction in stock shortages, logistics savings, and an increase in sales generated by better shelf management.

For the manufacturer: the interest lies in better forecasting of production orders, greater stability of relationships, a reduction in commercial conflicts.

Functions concerned

 Many areas are concerned by trade marketing, both on the producer and distributor side.

Logistics: trade marketing allows a harmonization of logistics aspects such as just-in-time organization, a reduction in the volume of products transported as well as storage areas in order to make savings on transport.

Information technology: with the exchange of a certain amount of computer data that allows all the functions concerned to be efficient. For example, the transfer of information on product sales, shelf profitability, inventory status, etc.

Product: trade marketing has a real impact on the product function. The producer adapts his product policy according to the distributor and the point of sale concerned. There are also exclusive features reserved for certain distributors. The product function of trade marketing also deals with the production of private labels by producers.

Promotion: with the joint development of promotional operations. For example, the promotional catalogue at the entrance of food supermarkets or product promotion operations within points of sale.

Studies: with a constant exchange of information on data and market developments.

Merchandising: the exchange of information on consumer behaviour and attitudes as well as the exchange of product performance in store, allows the producer to set up merchandising adapted to each point of sale.

Methodology and methodology

I propose a methodology to implement a trade marketing approach:

Identify the different possibilities and elements to be taken into account

Each of the two parties must reflect on the position to adopt with regard to trade marketing. The company must assess the degree to which the trade marketing approach is necessary, taking into account in particular the requirements of the market but also the customer. Moreover, the success of the approach depends on the company's willingness to open up.

To be in a competitive position

Each party must be positioned in relation to its market. Thus, a multinational will not have the same approach to trade marketing as an SME.

Adopt an appropriate trade marketing vision

An appropriate trade marketing strategy consists in adopting a technical-commercial vision aimed at going beyond simple referencing, by adapting the shelves according to the expectations of the manufacturer and the trader. This requires efficient management of the relationship between the industrialist and the producer.

Set objectives for the trade marketing function

Depending on the degree of involvement of the company in the trade marketing approach, the objectives defined will be different. These objectives can be, for example, to increase customer awareness, develop distribution services and set up operations with each distributor.

Identify and select priority partners

First of all, it is important not to give too much importance to the size criterion. A trade marketing approach is not reserved for the major retail chains and their main suppliers. Then, it is necessary to identify the companies about which we have a certain amount of existing information, due to an already established commercial relationship. Finally, the company must select from its portfolio of partners the one that has the most suitable profile for its trade marketing strategy.

Coordinate and integrate trade marketing plans

In this step, the previously written documents are shared by the trade marketing managers of each party in order to ensure consistency from a strategic, operational and economic point of view.

Limitations

At first, the trade marketing approach, like a traditional marketing approach, is constantly evolving. Indeed, the internal developments of both parties as well as the evolution of the environment are constantly changing the strategy put in place. Structures must therefore take into account the changes made at different levels of the chain and take new actions accordingly.

Secondly, the trade marketing approach requires a long-term investment in both human and financial resources. It is therefore part of a long and costly process. Finally, companies wishing to implement a trade marketing approach are seeing their culture change. They must approach relations with their trading partners in a different way.