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Trade Marketing 2017. A retail view

Fields of interest relevant today

Manufacturers and trade marketing specialists express their views in trade magazines. The widely varying points of view demonstrate that the industry is mostly still searching for a well defined role and function of this phenomenon in the Sales/Marketing organization. In addition to this, we hereby gladly offer our own point of view. Based on our daily contacts with retailers. Derived from our category analysis and from [major] retailers.
A retail view on trade marketing. And on cooperation as a process.

1. The store formula is often considered the starting point of trade marketing. Do you share this view?
Bierman: No, not really. We think that view is too limited. The quintessence of trade marketing is finding out how the retailer thinks and discovering what motivates him. Just like consumer marketing targets the consumer, mapping the consumer's behavior. A typical retailer only needs 5 minutes to explain the workings of his formula and customer profile, writing this down takes only one A4 piece of paper. These principles don't really change through the years.
What is there to add to that for you as a manufacturer? The core of the matter deals with quite different subjects.

2. Such as the role of the brand in the retailer's assortiment
Bierman: Manufacturers and Trade Marketers doing research on the retailer hit on 6 important clusters: assortment, presentation, logistics, cooperation, the consumer, promotions. What's the retailer approach on these matters. And what motivates him in the cooperation with the manufacturer and his opponents. If you focus on these research issues, you end up with all fields of interest that the retailer finds important in his cooperation with the manufacturer. Divided over 6 clusters including the role of the brand in the retailer's assortiment. These fields of interest merge into the retailer's category management for the relevant product group. The powerful source of Bierman's catman-model for the manufacturer consists of the fact that this model has been developed from the view point of the retailer. We map this through our category analysis. This is far from simple, by the way. On retail level the information at hand is often contradictory. With a retail organization one also frequently finds differing standpoints.
How to interpret information that is often squarely opposed. For trade marketing and account management this is often a challenging and difficult environment.

3. Is the consumer part of the field of the trade marketer?
Bierman: absolutely. Just like 'the trade' is part of the field of the consumer marketer. The difference between these two job labels will disperse soon. As it happens, this process has been going on for some time now. To my surprise, the category of marketers limiting themselves to the consumer and keeping their distance from the trade is still large in number. I strongly advise them to work on their proficiency in both areas. For your view on the future, observe both the consumer and the retailer. This advice also holds for the trade marketer. In recruitment procedures for marketers, we focus on top candidates in full control of both fields. If there's a lack of feeling for the trade, the consumer marketer has a huge setback compared to candidates with a proficiency in both areas. One can also observe how the career track for a versatile marketer enhancing his proficiency in both fields is generally developing more quickly.

4. As part of their trade marketing, manufacturers -with or without retailers- like to conduct shoppers research.
What is the added value of this?

Bierman: how does the consumer buy and why. And what is the role of the product group in the retailer's assortment. It seems logical to research these issues on consumer level and not on trade level (which we advise). Shoppers research willingly narrows down to the consumer and doesn't focus on the retailer. It is essentially a different research project than our category-analysis. 'We know the consumer,', is often the standpoint of the manufacturer, 'retailers don't.' Considering the practical consumer know how of the retailer, I don't share that opinion. Neither do retailers. They often know the consumer better than the consumer knows himself. Generally, manufacturers find this hard to accept.

I recall a manufacturer preparing an important introduction. Both the consumer and the new concept had been researched from all angles. Quantitative, qualitative. We were called in on the very last moment because signals from the retail market were not as positive as anticipated after all. The new concept was all right in terms of marketing technique, but the retailers clearly said 'no' to the supporting story and 'no' to the concept itself. Our task was to develop a category view from the point of view of Food Retail, used by account management as presentation for head offices.

The already available consumer data --research costs had by now ran up to E. 200.000 -- was evaluated by us in terms of relevance for the retailer. 'Now what is really relevant to the retailer, what information is redundant and what can we use for our presentation'. The relevant findings, summed up, turned out to fit on just one page of A4.
Acceptance of the new concept eventually became a success, partly based on consumer information handed to us by the retailer.

What's the additional value of consumer research by the manufacturer. And will this receive the acceptance from the retailer. That question is asked all too rarely. Hardly ever, really.

5. But how can the attention from retailers be obtained?
Bierman: by focusing on the quintessence, see the replies to questions 1 and 2 in this newsletter, and on point 4 'the right type of research''. The shop floor -a store manager, a fresh foods manager, a smart shelf attendant- usually has a sharp view on consumer behavior and buying patterns, and a clear understanding of the ways these can be directed. Retailers heavily lean on their own views while putting together the assortment and the presentation in the sales environment. By researching the consumer primarily from the point of view of the retailer and the shop floor, a considerable quantity of 'noise' is eliminated.

Reality demonstrates that a lot of research, provided by the manufacturer -Nielsen, IRI, GFK, consumer research, shoppers research- is not acknowledged by retailers. If that is the case, neither can there be acceptance in any way of the plan for cooperation.

Shoppers research: the major manufacturers keenly observe each other and the result is that a certain type of research can quickly become en vogue.
Shoppers research fails to provide answers to a huge number of relevant questions. Manufacturers are bound to find this out at some point.
It's a learning process.
6a.The initiative in the commercial relationship.
Bierman: how do you, as trade marketer, retrieve the right retail information and how do you translate this into a category view, coupled to a plan for cooperation, geared for wide acceptance on retail level. This, in essence, is the main issue for every manufacturer today. Cooperation with major retailers is a process which can be directed by the manufacturer and trade marketing. With the right knowledge of the facts and the proper tools, the manufacturer keeps the initiative in cooperation and in the commercial relationship. Presently, one doesn't. It's like chess, and today, the retailer holds the initiative, not the manufacturer.
Retailers develop their own instruction course category management that manufacturers can join. At the same time, other retailers move away from time consuming catman projects. There's only a small piece of the market left where the manufacturer can control the game but even there the boundaries are closing in.

6b.A shortened but effective catman project.
Catman projects that frequently have a running time span of 12 months and upwards fail to work. Today, it has to be quick and good. The running time of catman projects with our agency is 4 months. 90% of the time that our projects take, is homework for Bierman. After the research we need 3 days for the translation of our findings into the categoryview. Next, we demonstrate for Sales, Account Management and Trade Marketing during sessions on head office level how the right categoryview ensures acceptance of the plan for cooperation. Wide acceptance. This means -in Food Retail in most countries- acceptance with the 4 or 5retail organizations that control 90% of the market. This is also valid for the Out of Home market.
This way, category management quickly and efficiently becomes an integral part of the organization. And manufacturers recapture the initiative on their side. The initiative is elementary in the commercial relationship. Nothing is more frustrating than waiting to find out if a retailer is willing to embark on a market project with you, and observing how plans are postponed all the time.

7. What does Bierman mean by budget controlled and knowledge controlled?
Bierman: doing business with retailers is often very basic. As long as you keep pouring money into the relationship, retailers can be activated. The cooperation is often budget controlled, but this can't go on indefinitely. Ultimately, the manufacturer gives his net price and one will have to search for alternatives in order to get the attention of the retailer. The answer here is knowledge. Knowledge is the binding factor for cooperation, more so than 'the budget'; which -for a short period- is certainly a means to score for manufacturers. Knowledge is also an important approach for another important target: How to acquire the position of strategic trade partner for large scale retailers. Category leader. Not by power, but by strength.

8. Why does the retailer so rarely use the knowledge of the manufacturer when one often doesn't have access to this information?
Or, to put it differently, when one doesn't show any sign of having the relevant information?

Bierman: the manufacturer has access to an increasing mount of data and ever more tools. But retailers have for years demonstrated a waning interest in the available sources and the mounts of data. One sees it in the field: account management spends more time arguing over Nielsen than discussing the trade. To avoid the argument, one often leaves Nielsen in the suitcase. If you, as manufacturer, are not prepared to face these facts, then you are finding yourself in a very problematic situation today. By the way, I do think that the industry as such does acknowledge all of this, but there remains the matter of retailers showing an increasing unwillingness to move along.

Today, the retailer wants views. Not once, but all the time. Views supporting their development of the category. The fascinating fact is that retailers provide these views themselves during our depth-research on retail level. And not one view, but many. As market researcher, we often team up with Sales people from our client. We defend the categoryview, Sales defends the cooperation plan. In that order. Gaining acceptance is never really a problem.

The industry is also complaining about the weak feedback from retailers and about the lack of cooperation in ECR and category management projects. Presentations of our categoryview on head office level are fascinating pingpong sessions. Time is completely irrelevant here. Feedback as well. We usually get all retail information necessary to obtain a good cooperation.
If you want to reach the retailer today, you will have to bring a catching message. And if retailers say there's 'no time' or there's no response at all, this often is an indication for the quality of the message.

9. Doesn't the manufacturer know his own market better than the retailer?
Bierman: of course. A manufacturer knows all about his market, more than any individual retailer. But all retailers together may turn out to know more about the market and the consumer than the manufacturer. In our category analysis and catman projects it's about the synergy of retail knowledge and consumer knowledge. How we trace this information, which obstacles we meet in the process, but also what possibilities this research has to offer to the manufacturer, can be explained in 30 minutes.

10. What is the place and task of trade marketing in the organization?
Bierman: the function of trade marketing is not dictating but supportive.
A strong account manager doesn't allow himself to be dictated, but asks for cooperative thinking to tackle the upcoming issues together and to find solutions in cooperation.
There's often discussion about the classic differences between Sales and Marketing. With the right retail information there is no chance of slumbering discrepancies or outright gaps. Not between Sales and Marketing, not between manufacturer and retailer.
Trade marketing gets its authority and independence from three fundamentals:

a.The quality of retail information
b.The tools that can be developed based upon this --category analysis and categoryview-- and the acceptance these tools get from head offices and shopfloor
c.Solving specific issues. See: 'FMCG-issues 2017'
Trade marketing is generally not focused on what it is that makes the market buy; on what the trends are. They are producing numbers. What has the market done. There's no element of forecast in it. They are busy explaining why a product in that trade channel doesn't or didn't do well. There's no think tank behind it.
A trade marketing department should do more than simply produce numbers

How to meet top talent in trade marketing?
Sales managers and Marketing managers, Human Resource Managers and General management as well, are informed about our approach in recruitment of trade marketers through an introductory talk. With practical cases.
A talk about current and future developments in the employment market. About footholes and caveats in recruiting and selection and special points of interest. About the retailer's category management in your market and the course which major accounts are demanding from companies in FMCG.
Go to: Another view at recruiting and selection in Sales, Marketing and FMCG

The advice. The implementation
Bierman's consultancy doesn't stop at providing advice. Translating the findings into practice and supporting Sales and Marketing is part of our core activitities. We frequently participate on head office level or as "front man" in sales talks on head offices.
E-mail or call us for an introductory assessment or send this page to a colleague.

The quality of the information
determines the strength of the sales/marketing organization.
Not the quantity.

P.J. Bierman
telefoon: 0315-24.34.94