Trade Marketing strategies: Defying the private label phenomenon
Written by Rafa Pulido ·
In some ways, trade marketing strategies may seem similar to brand marketing ones. Nevertheless, the difference between the two lies in the target market. A brand marketer’s goal is to connect with consumers who make up the final piece of the puzzle. Trade marketing is about everything that happens prior to that final interaction. The balance of power has shifted between manufacturers and retailers over the course of the last few decades. Many now believe that retailers possess the ultimate power as they have the final say over which products are sold in their establishments. However, this assertion is still up for debate.
So what are some ways manufacturers are combating the status quo and how does trade marketing fit into this evolving panorama?
The state of the manufacturing industry
Leading cosmetics manufacturer, L’Oréal, produced a video back in 2012 that deep-dives into the truth of manufacturing today. The brand effectively talks about how many FMCG companies are seeking ways to optimise their bottom lines, boost sales and keep their own brands from being consumed by private label manufacturing.
Let’s have a quick look at it before continuing on with the article:
The trade marketing methodology was created as a means for manufacturers to find ways to collaborate better with their retailer counterparts. However—as the demand for private label products rises—FMCG manufacturers must be able to unite sales, marketing and supply chain operations to drive sales performance and protect their brands.
Private label products, who is making them?
As the video by L’Oréal reveals, some FMCG brands have succumbed to the reality of producing private label products for retailers. They do have the equipment and extensive “know-how” to do it—and producing private label products make for an extra revenue boost at the end of each quarter. German supermarket chain, Aldi, is the perfect example of a retailer collaborating with FMCG suppliers to produce its own private label products. In fact, the company has stated that 90% of their products are private label. But who are its prominent FMCG manufacturers? While rumours have run rampant, the retailer has been quite tight-lipped about the partners responsible for producing their products behind the scenes. While making private label products initially helps some manufacturers boost margins, it will eventually become detrimental to their own brands in the long-run.
Watch this video on the “Best New Products of 2018” awarded to the Aldi supermarket chain for its high-quality, private label products.
Is this conducive to well-established FMCG brands’ success? We will allow you to draw your own conclusions.
Trade Marketing strategies that combat the private label phenomenon
If FMCG manufacturers want to overcome the private label crisis and keep their brands alive, developing solid trade marketing strategies is essential. Instead of solely focusing on selling products at the consumer level, the FMCG brand must think about the product across the entire supply chain. This is where the concept of trade marketing begins. Powerful trade marketing strategies are built using a variety of approaches from a highly diverse toolkit. What works for one supply chain segment is not guaranteed to be the recipe for success for another. So how are trade marketers mixing and matching their tactics to connect with different supply chain members?
Marketing, Sales and stakeholder relations in Trade Marketing
Supply chain excellence is a tactful balance between sales, PR and marketing amongst distributors, wholesalers and retailers—and the tactics employed are quite similar to their perspective fields. Trade marketers’ responsibilities range from an assortment of different tasks such as:
- Cold calling: More on the sales end of the spectrum, cold calling requires a lot of practice and artistry to master it. While successful cold calling largely relies on numbers, developing the perfect sales pitch is key to win over new supply chain segment accounts.
- Trade show events: In the brand marketing world, events are usually left for Communication and PR professionals. This is not the case for trade marketing where events play an important role in raising awareness for an FMCG product and developing strategic relationships with stakeholders.
- Social media campaigns: Social networks can be lucrative platforms for the trade marketer who understands how to reach the specific profiles of professionals from their supply chain segment audience. Precise targeting is crucial to reduce costs and maximise conversion rates from quality prospects.
- Content marketing: Marketing materials produced by the FMCG brand must be compelling and attractive to supply chain buyers who will purchase in bulk. It’s important for the trade marketer to really sell how well their product will perform in particular retail establishments to support the sale.
Data insights, the Trade Marketer’s secret weapon
Private label products are growing in popularity as they represent quality at an affordable price point for consumers. However, this does not mean that branded products are not also valuable nor that they will not perform well in a retail location—they just need to be marketed the right way. But what can help these professionals regain their power and give them the upper hand during supply chain negotiations?
The answer lies in the access to insightful data. There is nothing more powerful than knowing which factors affect the performance of an FMCG product. Some trade marketers from big-name FMCG brands, such as Danone, are using Location Intelligence to obtain valuable information used to guide their push channel strategy. Unlike many other FMCG brands within the industry, Danone has predicted growth by 15% in the push channel by strategically placing their products where their customers are located.
Watch the entire Danone testimonial here:
What matters right now is for the trade marketer to take control of the situation and reinvent the way they communicate the value of their products to supply chain members. And one thing is for certain: telling the story through objective data is definitely a persuasive way to do it.
Learn how Location Intelligence can help you develop powerful trade marketing strategies and convince your supply chain partners with compelling data.