Editor's Note: Trading Places

Peter Breen

12/21/2017

Trading Places

Back in 2008, when the idea that “shopper marketing” had become critical to success at retail for consumer goods manufacturers was taking hold, Advertising Age infamously defined the evolving practice as “formerly known as trade promotion.”

This, folks, was not meant as a compliment. Rather, it reiterated a long-held belief among consumer goods marketers and their Madison Avenue ad agencies that “trade promotion” — which, to them, basically referred to any sales-driving activity undertaken at retail — was counter-productive to their own brand-building efforts. Its focus on price discounts and other deals, you see, eroded brand equity. And shopper marketing was just a glorified version of the same told trade plan.

Never mind that those “detrimental” trade deals often got more product onto store shelves and consumer tables, thereby driving incremental volume and keeping the company’s bottom-line strong enough to keep the funding going for all those loftier brand-building campaigns. Above-the-line thinkers never concern themselves with such below-the-line realities.

If advertising has always considered itself to be the “Great and Powerful Oz” of the marketing world, then trade promotion most certainly has been “that man behind the curtain” keeping the organization running.

Not that trade promotion has been totally undeserving of criticism over the years. In too many instances, the practice became the cost of doing business with retailers, a pay-for-play tactic for gaining feature and display space that would usually drive volume but often didn’t deliver sustainable sales and too often hurt profits. (The more strategically minded shopper marketing, with its efforts to infuse branding and loyalty building into the equation, was an attempt in part to address these drawbacks.)

The internal processes of trade promotion management and, more recently, trade promotion optimization, have sought to alleviate these issues by allowing consumer goods companies to track their spending and ROI, compare activity across accounts and share best practices, and plan more effective programs.

Unfortunately, improving the practice of trade promotion as it currently exists is no longer enough — not in a marketplace swinging toward e-commerce, where consumers find products on Google rather than in weekly circulars and then order them for home delivery instead of grabbing them off store shelves.

What’s needed is not just optimized trade promotion, but reimagined trade promotion. Lora Cecere of Supply Chain Insights, CGT’s content partner for this, our first annual Trade Promotion Management Report, describes the needed change as a move to “outside-in” planning, where trade promotion stops being a transaction between brand and retailer and evolves into a collaborative response to true consumer demand.

Another necessary step is for trade promotion to be taken out of its internal silo and aligned much more closely with the rest of the marketing plan — not just shopper programs, but all digital activity and even mass media (if your company is still doing any of that — snicker, snicker.) Account-focused programming that remains in historical vacuums truly will be detrimental to the brand’s overall efforts.

Cecere warns consumer goods companies ready to make these changes that they’ll have to “unlearn” a lot of the traditional practices they’ve used all along. It will be impossible to move effectively into the future if you’re still stuck on “anniversarying” your past.

Welcome to the new world of “outside-in collaborative planning” — formerly known as trade promotion.
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Editor's Note: Trading Places

Trading Places

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