Packaged goods marketers seem to coin a hot new concept every couple of years. In the past, we've seen Direct Product Profit and everyday low price. This year's buzzwords are "partnering with the trade." However, when we discuss this "breakthrough concept" with our prospective clients, they often dismiss it with "big deal!"
Partnering with the trade is a critical and vital answer to the crisis facing many packaged goods retailers trapped in the escalating cycle of allowances. However, the difference between glossy sales brochures and significant sales increases is best summarized by John Wayne's advice to the cocky young deputy sheriff: "If you talk the talk, you gotta walk the walk."
What was true in the Old West is also true in the new retailing industry of the 1990s. A program is only as good as the firepower (investment) that backs it.
As an example, one of the clients of TradeMarketing is currently building a two-pronged alliance with its customers, an alliance that includes category management with account-specific marketing.
It is both an ambitious and properly funded program that encompasses the Efficient Consumer Response gamut of unique concepts in space management and time reduction in the order cycle. This on-site support is enhanced by tailor-made consumer promotions that adapt tested national programs to local needs.
What our client brings to the table is national experience in its category (which it dominates) coupled with new ways to evaluate local movement figures. This program demands exquisite coordination that aligns sales, sales promotion and trade marketing into a local program that the retailer believes in and supports.
Our client believes that the heavy up-front investment is a solid investment. He says, "First, I'm becoming a shoulder-to-shoulder partner with my customers and, second, by redirecting dollars from wasteful deals into meaningful consumer events, I'm building my brand while improving year-end category profit for my customers."
Other sophisticated marketers are reaching the same conclusion. They're finding that they've got to turn their promotion planning upside down by: (1) finding what special promotions the account already runs, (2) plugging into the account's promotion calendar and (3) understanding the local market and how the account positions itself in that local dogfight. Thus, rather than trying to sell in one national program from "above," these imaginative clients are beginning at the grassroots level and working backward to meet these customers' needs.
Partnering with the trade is not a new concept. What has changed is the new respect that trade marketing is receiving because an estimated 60% to 70% of the total marketing budget goes to the trade. Thus, managing the effectiveness of these billions of dollars has become a vital new "marketing science" unto itself.
Marketers who only "talk the talk" are being forced to reach deeper and deeper into their deal budgets; marketers who aren't afraid to "walk the walk" are steadily building brands share and meaningful trade relationships.
It looks like John Wayne was right after all!
Frank Saulsbury is a director of TradeMarketing Inc., a San Francisco- and New York-based marketing services agency that specializes in trade marketing and trade communications.
