Trade marketing includes everything required to get your brand into shoppers hands. It represents 25% of your gross revenue and yet over 70% is wasted or ineffective. Learn how to maximize each and every selling opportunity to grow your natural brand.
Here are some statistics that every brand needs to be aware of and I do mean every brand. 25% of a brand’s gross revenue is tied to their trade marketing and yet 70% to 90% of their trade spending is wasted or ineffective. That’s a scary number. Again, this is something that every brand needs to be aware of. Knowing how to manage your trade marketing effectively can literally determine how long you’re going to be around, a month, a year, a decade or even longer. What is trade spending and why does it matter? Trade spending includes everything that it cost to get your brand, your product on a store shelf and into the hands of the consumer. That includes slotting promotional fees and a lot more.
Now, what is the real goal of trade spending? It’s to introduce your product to a new consumer. That’s it. It’s not to reward an existing consumer to buy your product. There are better strategies for that. We’ll talk about that at another time. The goal of your trade spending, any effective trade management program is to get new trials, new customers to buy and love your product. This is the most important thing that every brand needs to understand and needs to be able to get right. The challenge is that there is no easy way to figure this out. There’s no push-button strategy that automatically tells you how well you’re doing in terms of your trade spending.
For those organizations that claim that they have that, that’s a lot more complicated than that and simply relying on push-button strategies or push-button reports is not going to help you get more runway out of your available promotions. They’re not going to help you drive sustainable sales across every category. They’re not going to help you compete at a higher level. This is why this is the single most popular topic that I share on the podcast in my notes, in my content, et cetera. Sadly, as an industry, we don’t equip brands, especially small brands to understand the complexities of trade marketing and be able to effectively manage this.
Again, this is the unique opportunity that you have as a brand to not only differentiate yourself at shelf but to get a significant and sustainable competitive advantage by leveraging the strategies were going to talk about today and in future content.
Have you ever played pin the tail on the donkey? I want to use this analogy because it’s going to help us understand why trade marketing is so critically important. In the game pin the tail on the donkey, the goal is to attach a paper tail on the backend of a picture of a donkey. It sounds simple, but you’re blindfolded, so it’s a lot harder than it looks, especially when they spin you around three times, so you lose your bearing.
Now, while some of us are capable of getting the pin on a wall. That’s not enough to win the game. Trade marketing is a lot like that in terms of the tools that are out there. If you were able to pin the tail somewhere on the wall outside of the picture, well that’s not going to help you grow your brand. That’s why these push-button tactics don’t work. At the very least, even if you use those tools and those strategies, you’ve got to know the basics, you’ve got to know the mechanics of trade-marketing, how the money flows through to the end consumer and how you can leverage those moneys, those funds to be able to grow your brand sustainably.
If you don’t, well you might as well just throw your money away. Of course, I’m being a little facetious, but that’s effectively what you’re doing. Let me give you a quick example, the cereal category. The cereal category is a category where consumers would go into the category and they’d only shop when the product was on sale. The brands would spend a lot of money to promote their products with really deep discounts, but consumers would only buy their product when they’re on sale. Well, that’s not an effective promotion. Not only does it take a lot of dollars out of the category, but it can also dilute your brand and even bankrupt smaller brands.
That’s why this is so important for every brand to know and understand and to get good at. Now, one of the other benefits of this is that the more attractive your brand is to an investor the better rates you’ll be able to negotiate, the quicker you’ll be able to pay your investors off. The point is this, effective trade marketing can be the single most important tool in any brand’s toolbox. It can determine how long you’re going to be around. It can help you negotiate the best rates. It can help you stand out on a crowded shelf. More importantly, it can help you help your retail partner compete more effectively. If you can help them achieve their goals, greater sales, more traffic in their store, then they will help you achieve your goals, getting on more shelves, being found easier by their customers, your customers.
Download the show notes below
Trade Management Essentials – Strategies To Grow And Scale Your Brand
Empowering Brands | Raising The Bar
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