Over the last few weeks, I’ve been asked a number of times about the differences between trade marketing and shopper marketing. Many questions come from managers struggling with organizational questions like “Where should shopper marketing sit?” and “Isn’t it really just a new brand name for trade marketing?” The reality is that the differences between shopper marketing and trade marketing are more than just semantic and there are major issues in believing them to be interchangeable.
The history of trade marketing
Trade marketing has been with us for more than 25 years. Initially conceived as a function which would organize tailored promotions for large retail customers, it became increasingly important in the ‘90’s. Media fragmentation, retail consolidation and the growth of category management led many large FMCGs to conclude that greater support was needed in managing their retail customer (the ‘trade’). So trade marketing developed into a specialist function supporting marketing and sales, charged with the development and execution of point of purchase activities.
Trade marketing today
Today, almost all leading manufacturers have a trade marketing function in their business. But this fact alone does not mean that all businesses have a common understanding of trade marketing. Indeed one of my colleagues urged me to check-out the definition of trade marketing on Wikipedia; the long, rambling and incoherent ‘definition’ is accompanied by a request for help in improving it!
There’s no doubt that in most companies the support of trade marketers is valued by their colleagues in sales and marketing. But different companies seem to have different requirements of their trade marketers. For some it’s a strategic stand-alone function, for others it’s an administrative support function. Indeed there appear to be four common forms of trade marketing in operation globally, all with quite different roles and responsibilities. As a result, for many companies the role of trade marketing is the sum of its current activities, rather than its activities being driven by a coherent, clear role.
No surprise then that with the advent of the term ‘Shopper Marketing’ over the last decade we have seen many managers re-branding trade marketing as shopper marketing. While many trade marketing activities involve shoppers, or at least thinking about shoppers, simply changing the name of the function without really considering its role is in our experience, a bad idea!
What is shopper marketing?
Unlike trade marketing, shopper marketing is not an organizational function. It is a clearly defined business process with specific commercial outcomes. Shopper marketing is marketing; to shoppers: It is the process of understanding shoppers, then defining and executing a marketing mix, the purpose of which is to change shopping behavior in order to drive the consumption of a brand.
As a result, and unlike trade marketing, shopper marketing is not the sum of all the potential activities that could be applied to influence shoppers. Rather, it is the process of defining activities: the activities that are executed are the product of the shopper marketing process itself.
This is more than a semantic distinction – consumer goods companies need to market to shoppers more effectively now than at any time in the past.
Why shopper marketing is important now
Consumer goods brands face a barrage of competition, more so than at any other time in history, and the traditional mechanisms of above-the-line and below-the-line are faltering as communication becomes digital and mobile. At the same time retailers which have been growing and consolidating over the past 25 years now find that they need new business models to attract and retain shoppers.
In this environment the ability to understand, target and change the behavior of specific shopper groups is as commercially important today as being able to market products to consumers and sell them to retailers. Those businesses that excel in integrating their efforts with consumers, shoppers and retailers find that internal decision making is faster and marketing investment decisions are easier. They also enjoy greater support from retailers, which leads to superior results.
Where does this leave trade marketing?
The creation shopper marketing puts the trade marketing function at a crossroads:
- The function could develop deeper specialization in the trade space: focusing more on marketing to the trade, rather than marketing in the trade. This would, without doubt, enhance the impact of many sales teams around the world. It would also require marketing teams to extend their purview to include shoppers.
- The function could remain largely in its existing space but focus more on effectively engineering trade investments. This again would require marketing to extend its remit.
- The function could take on accountability for the execution of the shopper marketing process. This would require it to build stronger capability in shopper research, shopper insights and strategic planning and would bring the function much closer to the consumer marketing function. It would also require the sales function to be much more focused on execution with customers.
In any instance, the advent of shopper marketing is anything but the creation of a new name for trade marketing!
If you’d like to learn more about shopper marketing, trade marketing, check out our free e-books on Managing Channels and Shopper Research, and don’t forget to subscribe to our blog (take a look to the right for a sign-up box!) for free info most weeks!