Trade Vs. Shopper Marketing…Which One Drives Brand Strength?

The buzz word of the day is Shopper Marketing and today's discussion is whether Shopper Marketing is replacing Trade Marketing.  Do you know how to optimize both disciplines to drive your brand's strength?   A.G. Lafely's (CEO of Proctor & Gamble) latest philosophy is to move away from traditional trade spending in favor of shopper marketing as the best approach to a higher trade spending ROI. P&G has taken the approach to reduce or do away with trade spending over the past 30 years.

Several years ago, P&G made a bold industry announcement that they would suspend or greatly reduce trade spending in favor of a lower FOB price only to have to reinstate trade spending against their lower delivered price – within the same year.

From my observation the human nature is to act on a purchase decision when certain basic factors (or some combination) are met. For example:

1. I am sick and I need flu medicine.
2. We are out of OJ and I need to get some (or will there be some interchangeable alternative?).
3. Hey there is a new and different item I just tripped over in that display – let me try some.
4. My favorite yogurt is on sale I think I will buy 10 instead of 1.

How does a Fast Moving Consumer Package Goods (FMCPG) Company communicate its solution to basic purchase demand signals? In most cases brands rely on trade spending in the retail store to attract the consumer, and far too often those funds only buy down the price at the shelf. But does a temporary price reduction at the shelf really attract new consumers to your brand? How does a brand capitalize on consumers' demand signals apart from a high media budget?

  • It could increase reliance on couponing.
  • It could leverage In-Store marketing tools such as In-Store Radio/TV
  • It could increase In-Store product demonstrations to capture shopper attention
  • It could look for ways to differentiate their product in the eyes of the consumer by building a one on one relationship with the consumer using emerging e-marketing tools (Facebook, Twitter, your own CRM site, etc.).

I am seeing a marked movement away from quality performance vehicles such as feature and displays to short term on shelf price reduction (TPR) or basic price reduction tactics. From my research, it seems TPR tactics generate lower lifts versus higher quality executions such as a feature, display or some sort of In-Store Radio/TV blast that encourages the trial or pantry load decision.

Some are saying that Trade Promotion is not the optimal way to reach a consumer and grow your brand's position in the market place and Shopper Marketing is the new mantra on everyone's lips.  However, execution is the key missing ingredient.  Often, large companies cannot execute Shopper Marketing well because they have separate Trade Marketing and Shopper Marketing departments that rarely if ever collaborate on a holistic consumer/trade promotional strategy.

The best way to market to the shopper is to start small and build trust through frequent (but short) consumer relationship building interactions. Also, brands need to answer the trade Promotion questions such as, "Do more infrequent high quality Features capture more consumer attention and drive more trial and pantry loading events than long term reduced price events?"

A well integrated Shopper and Trade Marketing strategy combined with the proper measurement tools will provide the performance insight that these integrated programs have on purchase dynamics metrics such as penetration, purchase frequency and buying rate to build sustainable brand equity.

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