Imagine, for a moment, the marketing pie. We have the trade spending segment and the consumer marketing segment. Then, let's tabulate the services, both inside and outside corporate management, that support these different slices:
Consumer Marketing: Package design, consumer research, advertising, consumer affairs, publicity and public relations, consumer promotions.
Trade Marketing: Sales function and brand function.
Now given the division that you have in your mind, it does seem a little lopsided. Like overfeeding of consumer marketing and starving of trade marketing?
But let's look at the funding levels for each of these segments. Trade spending, whether in the form of promotions and slotting for most brands, far exceeds the consumer spending levels.
Now let's consider the research and evaluation services available for consumer spending vs. trade spending. Consumer marketing gets the lion's share despite the volume of trade numbers. It's not that trade numbers aren't valuable; it's how to interpret these numbers that separates the dedicated amateurs from the pros.
Furthermore, the crucial problem is what to do once the numbers have been sifted and understood? Who (and where) are the creative marketers that translate these defined problems into sales opportunities? Well, they're out there approaching the business from different directions, but headed for the same goal . . . marketing more effectively through the trade.
From a funding point of view, there are even larger inequities. Consider one of our client brands; a well-known food product whose advertising budget is running about 13 million. The trade promotion budget on the brand is about three times that figure!
To help them spend that $13 million, they have the resources of one of the top five ad agencies in the country with considerable media clout, consumer research departments and an award-winning creative staff. Who helps them spend the almost 40 million left on the trade side? Mainly, it's their brokers and buyers. And although we'd like to think that it translates into case sales, good data analysis shows that it just isn't so.
Certainly, trade marketing is no less a science than that of advertising or sales promotion. It has a far greater effect on the future of the brand than either of the other disciplines. A bold claim? Perhaps, but consider that great advertising doesn't help if the consumer can't find the product on the shelf. Nor does a creative consumer promotion do much to drive the business if the retailer doesn't merchandise behind it.
Many manufacturers are recognizing the importance of the trade marketing factor. At the same time, service companies are responding by specializing in the more effective and efficient execution of trade spending. In the not too distant future, every top brand in the country will have an advertising agency, a sales promotion agency and a trade marketing agency assisting in growth.
The trade marketing agency will find the most effective method to support the consumer effort, account-by-account, and choose the most efficient methods.
This new science is being driven by the ever-changing marketing environment and is applicable to all classes of trade. Innovative marketers have already integrated trade marketing into their sales and marketing efforts. Those left behind need to catch up if they are going to survive the shake-out of the 1990s. On that premise, all packaged-goods companies are quite literally betting the store.
Steve Cleere is the director of client services for TradeMarketing, a San Francisco- and New York-based marketing services agency that specializes in trade marketing and trade communications.