What is the relationship between trade marketing & shopper behavior?

The history of trade marketing

Trade marketing has been with us for more than25 years. Initially conceived as a function which would organize tailored promotions for large retail customers, it became increasingly important in the ‘90’s. Media fragmentation, retail consolidation and the growth of category management led many large FMCGs to conclude that greater support was needed in managing the trade. So trade marketing developed into a specialist function supporting marketing and sales, charged with the development and execution of point of purchase activities.

Trade marketing today

Today, almost all leading manufacturers have a trade marketing function in their business. But this fact alone does not mean that all businesses have a common understanding of trade marketing. Indeed one of my colleagues urged me to check-out the definition of trade marketing on Wikipedia; the long, rambling and incoherent ‘definition’ is accompanied by a request for help in improving it!

There’s no doubt that in most companies the support of trade marketers is valued by their colleagues in sales and marketing. But different companies seem to have different requirements of their trade marketers. For some it’s a strategic stand-alone function, for others it’s an administrative support function. Indeed there appear to be four common forms of trade marketing in operation globally, all with quite different roles and responsibilities. As a result, for many companies trade marketing is the sum of its activities.

No surprise then that with the advent of the term ‘Shopper Marketing’ over the last decade we have seen many managers rebranding trade marketing as shopper marketing. This is a bad idea!

Unlike trade marketing, shopper marketing is not an organizational function. It is a clearly defined business process with specific commercial outcomes. Shopper marketing is marketing; to shoppers: It is the process of defining and executing a marketing mix, the purpose of which is to change shopping behavior in order to drive the consumption of a brand.

As a result, and unlike trade marketing, shopper marketing is not the sum of all the potential activities that could be applied to influence shoppers. Rather, the activities that are created are the product of the shopper marketing process itself.

This is more than a semantic distinction – consumer goods companies need to market to shoppers more effectively now than at any time in the past.

Why shopper marketing is important now

Consumer goods brands face a barrage of competition, more so than at any other time in history, and the traditional mechanisms of above-the-line and below-the-line are faltering as communication becomes digital and mobile. At the same time retailers which have been growing and consolidating over the past25 years now find that they need new business models to attract and retain shoppers.

In this environment the ability to understand, target and change the behavior of specific shopper groups is as commercially important today as being able to market products to consumers and sell them to retailers. Those businesses that excel in integrating their efforts with consumers, shoppers and retailers find that internal decision making is faster and marketing investment decisions are easier. They also enjoy greater support from retailers, which leads to superior results.

Where does this leave trade marketing?

The creation shopper marketing puts the trade marketing function at a crossroads:

• The function could develop deeper specialization in the trade space: focusing more on marketing to the trade, rather than marketing in the trade. This would, without doubt, enhance the impact of many sales teams around the world. It would also require marketing teams to extend their purview to include shoppers.
• The function could remain largely in its existing space but focus more on effectively engineering trade investments. This again would require marketing to extend its remit.
• The function could take on accountability for the execution of the shopper marketing process. This would require it to build stronger capability in insights and strategic planning and would bring the function much closer to the consumer marketing function. It would also require the sales function to be much more focused on execution with customers.

In any instance, the advent of shopper marketing is anything but the creation of a new name for trade marketing!