A Beginner’s Guide to Trade Marketing

If you’ve ever seen an in-store product promotion or specially themed product packaging, then you’ve witnessed trade marketing in action. A CPG’s deep understanding of its customers — along with associated customer data — is a key component in a successful trade marketing campaign.

What is Trade Marketing?

Trade marketing is a B2B marketing strategy designed to increase consumer demand for a product through wholesalers, distributors and retailers.

🥇 The goal of any trade marketing campaign is to sell products to other companies who will then sell the products to customers.

An effective trade marketing campaign demonstrates a product’s unique value to all stakeholders – the manufacturer, the retailer, and the consumer. Consumer goods manufacturers use trade marketing with retailers to justify a products prominent display, increase a product’s shelf-space, or promote a product through in-store events.

Who Uses Trade Marketing?

CPG manufacturers use trade marketing strategies to boost their sales, increase their revenue and extend their market share by leveraging their partners’ ability to distribute their products in the market.

In a typical supply chain…

• The CPG manufacturer produces a product and ships it to a distributor. ↷
• The distributor sells it to wholesalers. ↷
• Wholesalers sell the product to retailers. ↷
• Retails promote the product to shoppers. 

Any gap in that process can lead to stalled sales and cost increases in the form of returns, expirations, or return shipping. 

Why is Trade Marketing Important?

Trade marketing is crucial to creating sustained growth for a product; it is an proven strategy that enables a CPG manufacturer to grow market share in an evermore competitive marketplace. Trade marketing has proven itself time and again as a successful method of increasing dissemination of a product; in fact, a recent survey reports that 90% of trade show attendees are actively looking for new products.

Yes, you want to differentiate yourself from the competition at the consumer level, but you should also differentiate yourself from competition with your supply chain partners.

Two important factors that make trade marketing an essential tool of your supply chain:

[1] Increasing competition 

In a hectic CPG marketplace, where consumers are overwhelmed by product variety, it’s imperative to stand out, and even eclipse, the competition. Manufacturers that implement compelling trade marketing programs highlight their brand’s advantages and unique values, something that may not be presented easily at the retail level. 

[2] Relationship building 

A strong relationship can pave the way for more business, as supply chain partners become more reliant on each other. A bridge of mutual growth transforms the relationship from a day-to-day transaction to one of a symbiotic nature, where everyone involved profits. The better the relationship a manufacturer has with its supply chain partners, the easier it is to distribute its product. As products flow down the proverbial ladder, information will flow up from distributors, wholesalers and retailers. This information can be used to better perfect the product, and its marketing, to meet the consumer’s needs.

7 Trade Marketing Examples

Knowing how, when, and why you are creating a trade marketing campaign is crucial to its success.

The main trade marketing strategies and tactics are:

• Trade promotions – Trade promotions are geared directly toward specific partners in the form of price reductions, bonuses, incentives, and other sales-inducing practices. Promotions can provide a boost in the market, and are effective ways to build strong relationships with your partners.

• Advertising – Advertisements can reach mass audiences or can be targeted to specific audiences, in order to build awareness of a product or brand. Successful advertising campaigns, targeted to the right audiences, make the jobs of distributors, wholesalers, and retailers much easier – as customers are aware of your product.

• Branding – Branding highlights a product’s distinct advantages and unique value, and even addresses a buyer’s very identity. As more products continue to enter the market, successfully branding your product is imperative.

• Strategic partnerships – Strategic partnerships can help you move your product with the help of other businesses. A partner’s operations, insights and data can also benefit you in updating and improving your processes.

• Digital marketing – Digital marketing allows you to direct your marketing to specific groups who make up your best consumer demographic. Today, buyers use digital channels to research purchase decisions, so a strong digital content platform can help you stand out among the competition.

• Coupons – Coupons convince shoppers to try your product, and increase purchases from your existing customers. While paper coupons are great, digital coupons make it easy to produce and track personalized offers. Email coupons, retailer-specific coupons, and social coupons are some of the ways digital coupons are used to create demand.

• Trade shows – Trade shows put your product on display. According to the Center for Exhibition Research, there were more than 9,000 B2B trade shows and exhibitions held in the US in 2019, contributing $101 billion to the nation’s GDP. However, the global spread of COVID-19 dramatically changed the trade show industry. In normal times, trade shows were a great avenue for CPGs ready to introduce new products or enter new markets. Only time will tell if trade shows will remain a part of the trade marketing landscape.

What is a Trade Marketing Manager?

A trade marketing manager’s role is critical in creating, sustaining, and optimizing the trade marketing process.

A trade marketing manager develops robust and adaptable marketing strategies that address the current market’s requirements and trends. 

Other responsibilities of a trade marketing manager include: 

• Analyzing marketing trends and data
• Negotiating with supply chain partners
• Launching new products
• Building partnerships
• Opening channels in new markets
• Creating and/or executing winning campaigns and strategies using trade promotion optimization

What is Trade Promotion Optimization?

Trade promotion optimization is the process of utilizing integrated goals, factoring in promotion (price / duration), supply constraints, and predictive analysis to create continuously improving trade strategies and results.

Trade promotion optimization software (TPO) uses a data-driven analytical approach that leverages customized algorithms and machine learning to control the spend in trade investments while simultaneously maximizing the results and increasing ROI.  Business requirements can be layered into the system to ensure that the optimized plan accounts for any promotions that retailers require from the CPG company.

There’s an even more fundamental differentiator that will play a critical role in how companies effectively compete in the decade to come: getting the right data, extracting insights from that data, and identifying platforms on which data can be used strategically.

Deloitte CEO, Cathy Englebert

TPO software enables optimization through multiple capabilities, including:

• Data harmonization – TPO software collects data from different sources—such as syndicated data, shipment data, or spending data—and standardizes it to make sense of the torrent of information that you receive. This clear-cut view can make the difference between spending money unwittingly and knowing exactly what each dollar is being spent on and why.

• Baseline modeling – TPO software creates a baseline and allows you to introduce changes that can elevate the effectiveness of your trade promotion activities. This gives you higher visibility, reduced costs, and gives you more control over trade promotions.

• Post-event analysis – TPO software can quickly analyze your post-event data. Using TPO software, you have visibility into your ROI, which tactics drove the most volume, what the promotion’s strong or weak points were, and if the outcome matched your pre-set goals. 

• Optimization – TPO software allows you to optimize your trade investments through real-time data, higher visibility, tighter control, and comprehensive information. This level of complete optimization allows companies to become proactive, manage risks, and increase the gap between them and the competition.

3 Ways to Build an Ideal Trade Marketing Program

An ideal trade marketing program is much more than setting a strategy—it involves a process of optimization at the highest level. Optimizing trade marketing can take your business to greater heights through automatic data analysis, seamless software integration, and profitable outcomes.

• Analytics – Data analysis is the basis of growth. The better your analytics, the more information you can leverage to make informed decisions that benefit your business. TPO analytics provide you with real-time information and a clear view of your spend so that you can transform your stance from reactive to proactive.

• Integration – In order to optimize your trade promotion management process, full integration between TPM and TPO solutions is needed. This creates a centralized hub for all the data and information required to conduct efficient trade promotion activities.

• Profitable Outcomes – Overcomplicating things may lead to an influx of low-quality data, impaired visibility, and convoluted decision making. Keep everything simple and straightforward to obtain the desired outcomes. Treat TPM with the level of complexity and detail-orientation it requires, but TPO software is about making processes clear and valuable.

At Blacksmith Applications, we have a successful track record of offering our CPG clients trade solutions that improve processes, reduce task-times, prevent costly errors, and enable more profitable business decisions that are based on scientific data rather than guesswork or assumptions.

Through our reporting and analytics functionality, we provide you with the information you need not only to grow your business but grow the gap between you and the competition.

We help your teams save weeks worth of time on administrative tasks, help you make more informed decisions, and help your business boost its bottom line.

Reach out to learn more about how your business can prosper with the help of our solutions.