What Is Trade Marketing?

Introduction to Trade Marketing

Although sometimes confused with strategic Sales planning, Trade Marketing is actually a marketing discipline that relates to increasing demand with supply chain partners, such as distributors, wholesalers and retailers, rather than at the consumer level. It is not a replacement for Brand Marketing, but a complementary process by which you enable consumer access to your brands through distribution. In short, Trade Marketing is the process by which you ensure available supply to meet the consumer demand created by your Brand Marketing. Following is a very high level overview of the general principles and components of Trade Marketing.

 

3-Tier Supply Chain

Wholesale Customer Types

Supply Chain customers include both wholesale and retail entities and, generally, a two to three tier structure. Wholesale entities generally include various types of distributors, distribution centers and sub-distributors. Depending on the number of levels within the supply chain, these wholesale entities may be direct-buying (i.e. purchasing direct from the manufacturers) or indirect-buying (i.e. purchasing from other supply chain distributors). The primary advantage in dealing with wholesale partners lies in their ability to efficiently deliver a variety of products, from many manufacturers, in small quantities to many different retail outlets.


Retail Customer Types

The Retail universe is made up of a wide variety of retail outlet types and is often categorized by type of ownership into controlled, or corporately owned groups, and independently owned retailers. In some case, the controlled retail universe may represent more than one level in the supply chain with hybrid wholesale-retail entities such as chain, or controlled, distribution centers or buying groups. A good example of a large controlled retailer in this category would be Wal-Mart. With thousands of stores and dozens of distribution centers, Wal-Mart operates under disciplined corporate control and represents at least two levels of the supply chain.


Outlet or Trade Channel Types

While Trade Channels and Outlet Types are somewhat distinct in sophisticated Trade Marketing models, they are often used interchangeably in simpler models. In a simpler model, both are used to categorize supply chain entities, both wholesale and retail, into similar groups that can be engaged with common, or similarly structured, programs. A short listing of Trade Channels in a standard CPG supply chain might include the following.

  • Convenience
  • Dollar
  • Drug
  • Grocery/Supermarket
  • Hardware/Home Improvement
  • Mass Merchandiser
  • Wholesale Club
  • Other

Components of Trade Marketing

Trade Marketing components can be categorized into three distinct groups based on the type of activity performed and the type of company role that performs it. These categories may vary by company but one model that is employed throughout the world includes separation in to Strategic, Operational and Executional groups. Examples of various components of each of these groups are listed below.

Strategic Components

Operational Components

  • Trade Program Development
  • Sales & Operational Planning
  • Category Management
  • Trade Coverage Planning
  • Trade Investment Modeling

Executional Components

  • Account Management
  • Territory Management
  • Trade Approach Contacts
  • Customer Call Processes
  • Trade Events & Relations

 

Trade Marketing Process Graphic

Effective Trade Marketing

While this does not provide a detailed guideline of  Trade Marketing implementation, it is a fairly comprehensive summary of the various components. Like any other Marketing function, Trade Marketing is a process. The simplicity or complexity of the process is completely dependent on the desire or the capabilities of any organization to implement. While a sound Trade Marketing function is no guarantee of success, effective Trade Marketing will certainly improve your potential to secure the necessary trade partnerships to ensure your brands and products have sufficient distribution to meet the consumer demands that sound Brand Marketing can create.

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Article written by John Howard

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John is the founder and President of Frontera Marketing Group. A graduate of the University of Iowa, John had more than 20 years of professional experience in Sales and Marketing prior to founding FMG. His corporate background included a number of companies, industries and roles including National Account Manager, Product Manager, Brand Manager, Director of Trade Marketing, Director of Marketing and Vice-President of Marketing.

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9 Comments


  1. syed zia husain

    Good article

    October 30th, 2012 at 8:56 pm Reply

    • President

      Thanks! We hope it was helpful. Feel free to let us know if you have interest in other marketing topics.

      November 30th, 2012 at 9:30 am Reply

  2. Claudio Ordóñez

    Very good article. Just what I needed to give an explanation to some of my members of my sales team.

    December 10th, 2012 at 2:59 pm Reply

  3. vivek

    Really superb article, it’s help us a lot.

    December 18th, 2012 at 2:04 am Reply

  4. harshal borse

    Valuable & important

    January 8th, 2013 at 3:44 am Reply

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    I do agree with all the ideas you’ve offered on your post.
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    March 9th, 2014 at 1:42 pm Reply

  7. Preeti singh

    Superb article!!!

    April 13th, 2014 at 8:19 am Reply

  8. Amit Dubey

    Great insights!!!!

    Can you please explain components of Trade marketing in detail?

    July 31st, 2014 at 10:09 am Reply

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