For brands present in distribution networks, maximizing sales in stores managed by third-party chains is a considerable challenge. The relationship between suppliers and distributors is often antagonistic, with their interests systematically pitted against each other.
However, a wind of change has been blowing through the retail industry for the past few decades. Its name: trade marketing. This tool is designed to meet the challenges faced by companies seeking to boost performance within a distribution network, and to collaborate effectively with their partners on the distribution side, both retail chains and points of sale.
It's a question of rethinking the software of commercial relations to build a win-win cooperation with partners, in order to increase the benefits for both parties.
Sidely takes you on a tour of a key discipline for successful distribution.
Trade marketing can be understood as the marketing of distribution or commerce.
Its general principle is cooperation between supplier and distributor; by defusing the logic of opposition, the parties exchange strategic information and co-design operational systems to increase sales and/or profitability for all involved.
The actions created and deployed jointly enable us to meet common challenges, such as revitalizing an area in a store, finding the right selling price for a product, or optimizing inventory management.
Unlike retail marketing, which is BtoC-oriented, trade marketing focuses on the distribution channel; it is therefore BtoB marketing. However, the consumer is implicitly involved, as collaboration reduces the impact of tensions between manufacturers and retailers on the shopping experience. Whether it's a question of shelf selection, price image or point-of-sale information, the customer benefits from a better-defined value proposition.
The relationship between supplier and distributor is often marked by conflicting objectives. The former wants to sell at a high price, the latter to buy at the best price. Each considers the other's margin to be detrimental to its own. One needs cash flow to finance production, the other prefers to pay as late as possible to remunerate its partners once it has made its figures. Finally, every brand wants the best place in the best aisle, while the retailer seeks the optimal assortment by aligning supply with demand.
The relationship therefore seems to be moving naturally in the direction of arm wrestling. And yet, it's in both parties' interests to work together to get sales off the ground. By exchanging strategic information, manufacturers and retailers discover the considerable potential that can be derived from their cooperation. Trade marketing makes it possible to transform mistrust into trust, retention into exchange, and shortfalls into growth opportunities.
Trade marketing originated in the USA in the 1980s. As retailers took over from FMCG brands and imposed their terms on them, some key players reviewed their strategic approach to break the deadlock of cut-throat negotiations. For example, the giant Wal-Mart designed an IT platform enabling suppliers like Procter & Gamble to track sales and inventory in real time, store by store.
In France, the arrival of trade marketing is a little later, but it has also become an essential part of the solution to the overwhelming domination of supermarket chains over their suppliers. In the world of supermarkets, the word " cooperation" is far from insignificant: historically, cooperation agreements govern the services suppliers are required to provide in order to see their products promoted in the partner network's sales outlets.
Although born in the world of mass retailing, trade marketing can also be found in the pharmaceutical industry, and in all other areas of distribution, such as on-trade and off-trade distribution in the on-trade. As soon as there is a BtoBtoC circuit, there is a need to establish a collaboration based on the search for mutual benefits between manufacturers and sales outlets. This logic of reciprocity stimulates the implementation of operational solutions to maximize sales.
Trade marketing relies on several key levers to optimize point-of-sale performance:
Trade marketing is transforming many sales promotion practices. At the forefront are merchandising and special operations. Although manufacturers continue to finance product promotion and dramatization on their own, the introduction of strategic meetings with retail counterparts is transforming the way trade marketing is viewed at the point of sale.
It's all about exchanging strategic information, which used to be kept in-house - not to say secret - in order to invent the best sales operations together. Strategic calendars, competitor performance, packaging, back margins... any subject can potentially be included in the discussion, as long as the distributor and supplier manage to reinvent the customer's experience of the shelf, and boost sales of a product or category.
The success of trade marketing initiatives also depends on the quality of the data exchanged between brands and distributors. EDI (Electronic Data Interchange) links can automate the transmission of strategic information such as stocks, orders, deliveries and sell-out data.
The latter are particularly valuable: they enable manufacturers to analyze actual point-of-sale performance, to steer their actions (promotions, assortments, restocking) more precisely, and to adjust their strategy in near-real time.
The structuring of these information flows, often integrated into shared tools (supplier portals, connected ERP systems, collaborative dashboards), becomes a decisive lever for improving responsiveness, transparency and joint performance.
At the same time, companies continue to rely on themselves; during their sales rounds, area managers and other travelling salesmen use a retail execution CRM to structure and accelerate shelf surveys, place orders from the shelves and calculate digital holdings. By instantly feeding field data back to head office, sales forces enable marketing to liaise with brand teams to realign brand presence and merchandising at point-of-sale.
It's hard to talk about trade marketing without mentioning the related discipline of category management This technique aims to analyze sales performance by universe, in order to identify opportunities for improvement that would not have emerged from brand vs. brand comparisons.
Example: A supermarket floor manager notices that sales in the "savory appetizers" category are starting to stagnate. He analyzes the performance of each sub-segment, and notes that certain potato chip references have a low turnover. At the same time, consumption of seeds (almonds, cashews, aperitif mixes) was rising sharply. He therefore decided to eliminate poorly performing duplicates and increase the proportion of shelf space dedicated to promising products. To encourage impulse buying and boost the average basket, complementary products (dipping sauces, soft drinks, etc.) were placed nearby. The result: a more coherent offer, a clearer aisle, and a category that saw an 8% increase in sales in record time.
In this example, if you're a supplier to this store, there's a lot at stake: you risk being dereferenced (potato chips), or missing out on a great opportunity (sauce), simply because you're not on the radar of the relevant department manager. On the other hand, by working hand in hand with the distributor, you could have been at the forefront of the department's reorganization, by alerting your pair, by being a driving force behind the assortment, or by suggesting an operation to revitalize the area.
Category management is therefore a key technique in trade marketing, as is anything that increases value in exchange with the retailer.
Conclusion
Trade marketing can thus encompass countless actions and practices. That's why it's as much a culture as a technique. Implementing it requires a major investment on the part of management, if we are to succeed in changing mindsets internally and bring about in-depth, long-term changes in distributor relations.
When this transformation is carried out properly, the entire organization converges towards a new type of in-store performance, based on exchange and transparency with retailers and points of sale.
Widely used in the retail sector, trade marketing is gradually making inroads in other sectors, as companies realize that they cannot remain in permanent opposition with their partners, and that each possesses information that is crucial to the other.
It's a win-win situation!
