An investigation into trade marketing practices by fast moving consumer goods manufacturers

Résumé du document

In the current distribution process, retailers and manufacturers have to work together. This relationship has often been conflictive, but now is the time for collaboration. Indeed, looking at the different fields where suppliers and retailers have to work together, we can easily understand the role of Trade Marketing. This paper highlights the central place of Trade Marketing in FMCG companies. Though it's called Trade Marketing or not, we will see that these practices are imperative for any FMCG company because of their dependency on retailers.

In theory, Trade Marketing is defined as a methodical procedure carried out jointly by suppliers and retailers, whose objective is to better serve customers' needs and expectations, increase profitability and competitive position, while taking into account each other's constraints and specificity. In practice, if FMCG companies use Trade Marketing, it's often to better control their products. Indeed, consumers do not buy the product directly from the manufacturer, but via wholesalers, distributors, and retailers. So, besides communicating with the consumer directly, the manufacturer must also ensure that all intermediates are positioning and promoting their products favorably. Between Sales and Consumer Marketing department, Trade Marketers have to be a link between these two entities, to have a higher impact on the relationship with retailers.

While the Consumer Marketing department manages the brand, and builds the communication based on the shoppers' insights, Trade Marketers develop channel strategies to reduce costs, and increase purchases. They select the channel that best suits each operation, and design commercial arguments, Point-Of-Purchase (POP) vision, and displays. Based on the Trade Marketing action plan, the Sales department negotiates with the retailers, to implement and monitor the operation, which is aimed to generate a higher purchase volume.

Extraits

[...] The Hague. Academic Service. Domegan, Christine. Fleming, Declan Marketing Research in Ireland: Theory and practice. Gill & Macmillan. Dornier, Philipe-Pierre. Fender, Michel La logistique globale : Enjeux, Principes, Exemples, Editions d'Organisation. Harvard Business Review On Managing the Value Chain. Boston. Harvard Business School Press. [...]

[...] Several methods of data collection are used, generally this is the job of market studies agencies, but more and more manufacturers are looking for collecting their own data. The main tool is the household scanner panel (fig 2.3 which provide a lot of information on basic issues (price, quantity, frequency, brand, store, and demographics details). Concerning qualitative data, interviews at the aisle or focus group discussion frequently happen. However, with improvements in new technologies, some manufacturers and retailers which have the resources can use more precise tools to track and segment the shoppers. [...]

[...] LD: In my view, this is mainly an understanding issue; realize that the world is changing. They have always worked in a certain way. In the 80's P&G started thinking about the shopper, however, I was very surprised to see how long it was for the other manufacturer to understand that it was necessary to work in another way. Now everybody is talking about it, but the quality of the work can really be improved. FG: What are the main gaps of the companies which try to exercise this discipline? [...]

[...] So, it isn't only Unilever products, but it contains also, competitive products. This example, show what does it mean to start from the shopper point of view and obtain a win-win-win situation. FG: To finish, could you give me your opinion about the future of the Shopper Marketing? Should we expect a real development? LD: Yes, I am persuaded, with the two factors cited previously, which are that the consumer is more and more difficult to reach, and convince, and the fact retailers are more and more organised, it will certainly continue to evolve in that direction. [...]

[...] The objective is to facilitate the time devoted by the shopper through the shelves seeking their products. Indeed, ―traffic in itself never buys anything; it is traffic investing time that becomes shopping.‖ (Sorensen, 2009). Dr Herb Sorensen argue that it is possible to determine the efficiency of the retailer's use of shopper's time using the ratio time(sec)/sales(€). These measures can help manufacturers to understand where shoppers are spending their time in the store, in order to ―make relevant offers‖ and to ―expedite their purchases‖ (Sorensen, 2009). [...]