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Channel Marketing and Trade Promotion
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What is trade promotion and how does it fit into channel marketing?
How do trade promotion’s strategies and practices operate?
What is co-marketing and why is it an “integrating” practice?
Chapter Outline
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Channel marketing is more critical now than ever because of a major power shift from:Channel marketing is more critical now than ever because of a major power shift from:
Chapter Perspective
ManufacturersManufacturers RetailersRetailers
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Opening Case: Finish Line
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A trade-promotion partnership including:• Use of a Nike-recommended agency• Joint Finish Line/Nike in-store fixtures/POP
displays• Joint advertising on TV and in magazines• “Nike Stories” in Finish Line Magazine
A trade-promotion partnership including:• Use of a Nike-recommended agency• Joint Finish Line/Nike in-store fixtures/POP
displays• Joint advertising on TV and in magazines• “Nike Stories” in Finish Line Magazine
Position Finish Line as the Nike destinationPosition Finish Line as the Nike destination
A trade-promotion partnership including:• Use of a Nike-recommended agency• Joint Finish Line/Nike in-store fixtures/POP
displays• Joint advertising on TV and in magazines• “Nike Stories” in Finish Line Magazine
A trade-promotion partnership including:• Use of a Nike-recommended agency• Joint Finish Line/Nike in-store fixtures/POP
displays• Joint advertising on TV and in magazines• “Nike Stories” in Finish Line Magazine
Position Finish Line as the Nike destinationPosition Finish Line as the Nike destination
• 20% increase in Nike sales at Finish Line• “Nike destination” scores rose from 20% to
62%
• 20% increase in Nike sales at Finish Line• “Nike destination” scores rose from 20% to
62%
Opening Case: Finish Line
Challenge:Challenge:
Answer:Answer:
Results:Results:
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Vs.
Traditional conceptTraditional concept
Trade Promotion• Discounts and premiums
offered to retailers in exchange for their promotional support
Trade Promotion• Discounts and premiums
offered to retailers in exchange for their promotional support
Traditional conceptTraditional concept
Trade Promotion• Discounts and premiums
offered to retailers in exchange for their promotional support
Trade Promotion• Discounts and premiums
offered to retailers in exchange for their promotional support
What Does What is Trade Promotion?
New thinkingNew thinking
Channel marketing• An integrated process
that uses personal selling, trade promotions, and co-marketing programs to build relationships with retailers and other channel members
Channel marketing• An integrated process
that uses personal selling, trade promotions, and co-marketing programs to build relationships with retailers and other channel members
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Common Channel Members
Wholesalers: Companies that move goods from manufacturers to retailers
Bottlers: In the soft drink industry, local companies who buy ingredients then mix it, bottle it, and sell it to local stores
Dealers: In the automotive industry, they buy cars from the manufacturer, and display models on their lots/showrooms
Retailers: The stores that sell products and services to consumers
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Think About It
•When a discount store like Target features Tide in its ads, does it make the brand seem ‘cheap?”
•How about Wal-Mart?
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Sampling the Product
Sampling the Product
Stimulate Consumer Demand
Stimulate Consumer Demand
Special OffersSpecial Offers
Research Consumer
Needs
Research Consumer
Needs
Shelf-management
Diagram
Shelf-management
Diagram
Profit Projections
Profit Projections
Slotting Allowances
Slotting Allowances
Shelf-management
Diagram
Shelf-management
Diagram
Profit Projections
Profit Projections
Research Consumer
Needs
Research Consumer
Needs
Sampling the Product
Sampling the Product
Special OffersSpecial OffersStimulate Consumer Demand
Stimulate Consumer Demand
Selling New Products
SellingSelling
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The trend is toward more trade support of existing products at the expense of consumer promotion
The trend is toward more trade support of existing products at the expense of consumer promotion
Promoting Authorized Products
Percent of Marketing Budget 1997 2001
Consumer promotions 24 15
Trade promotions 53 61
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Control Inventory
Levels
Control Inventory
Levels
Respond to Competitive Programs
Respond to Competitive Programs
Increase DistributionIncrease
DistributionBalance DemandBalance Demand
Promotional Support by
Channel Members
Promotional Support by
Channel Members
Respond to Competitive Programs
Respond to Competitive Programs
Control Inventory
Levels
Control Inventory
Levels
Balance DemandBalance Demand
Increase DistributionIncrease
Distribution
Trade Promotion Objectives
ObjectivesObjectives
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In-store Support For the Cheese Industry
++
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Counter New Competitive Introductions
Counter New Competitive Introductions
Counter New Competitive Introductions
Counter New Competitive Introductions
Complement Consumer Promotions
Complement Consumer Promotions
Motivate Trade Support With Allowances
Motivate Trade Support With Allowances
Complement Consumer Promotions
Complement Consumer Promotions
Trade Promotion Strategies
StrategiesStrategies
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Dealer ContestsDealer
Contests
Dealer LoaderDealer Loader
Volume DiscountsVolume
Discounts AllowancesAllowances
Sales TrainingSales
Training
Point of Purchase
(PoP)
Point of Purchase
(PoP)
Sales TrainingSales
TrainingDealer LoaderDealer Loader
Dealer ContestsDealer
Contests
AllowancesAllowancesVolume DiscountsVolume
Discounts
Trade Promotion Tools
ToolsTools
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A Special Advertising Allowance For Running this Ad
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Insight: Trade Promotion Agencies
Developing and managing trade promotion programs requires a unique combination of brand marketing and retail understanding. Most advertising agencies and general marketing communications agencies do not have the channel understanding.
However, there are a handful of agencies that specialize in trade promotion, and due to the demand, more agencies are starting to offer their clients trade promotion services at some level.
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An Example of Dealer Loader Rack
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Tales From the Real World
Sometimes in the real world, good channel marketing comes down to sharing some simple information and advice.
For example, Oscar Mayer helped encourage the adoption of its new “Breakfast Ham” product by working closely with retailers to make sure that it was displayed next to bacon and sausage (in the breakfast meats section) rather than with traditional ham products (in the refrigerated meats section).
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An Example of POP Clutter
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IMC In Action: Kendall-Jackson
++
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Creation of a channel marketing team that:• Helped train staff at Red Lobster, Olive
Garden and Hyatt Hotels• Advertised in trade journals to build
relationships with retailers• Worked with retailers to increase aisle space• Created a cross promotion with Hormel
promoting wine and meat
Creation of a channel marketing team that:• Helped train staff at Red Lobster, Olive
Garden and Hyatt Hotels• Advertised in trade journals to build
relationships with retailers• Worked with retailers to increase aisle space• Created a cross promotion with Hormel
promoting wine and meat
To increase sales without huge ad expensesTo increase sales without huge ad expenses
• Sales volume increased 24% versus 2% for the industry
• Sales volume increased 24% versus 2% for the industry
IMC In Action: Kendall-Jackson
Challenge:Challenge:
Answer:Answer:
Results:Results:
Creation of a channel marketing team that:• Helped train staff at Red Lobster, Olive
Garden, and Hyatt Hotels• Advertised in trade journals to build
relationships with retailers• Worked with retailers to increase aisle space• Created a cross promotion with Hormel
promoting wine and meat
Creation of a channel marketing team that:• Helped train staff at Red Lobster, Olive
Garden, and Hyatt Hotels• Advertised in trade journals to build
relationships with retailers• Worked with retailers to increase aisle space• Created a cross promotion with Hormel
promoting wine and meat
To increase sales without huge ad expensesTo increase sales without huge ad expenses
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What is Co-Marketing?
Co-marketing: A customized manufacturer-retailer joint effort designed to have a better price/image balance in local retail advertising of manufacturers’ brands
• Increasingly important for brands because:•Competition for shelf space is intense•Need to accommodate the growing power of retailers
•5 chains control 50% of all U.S. grocery sales
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Build TrafficBuild Traffic
Maintain Brand ConsistencyMaintain Brand Consistency
Encourage IntegrationEncourage Integration
Maintain Brand ConsistencyMaintain Brand Consistency
Build TrafficBuild Traffic
Three Co-Marketing Objectives
ObjectivesObjectives
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IMC In Action: P&G
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Development of Organization 2005 that:
• Conducted research to better understand consumer needs
• Shifted money from coupons to channel marketing efforts
• Allocated $100 million annually for retailer-specific trade promotions
Development of Organization 2005 that:
• Conducted research to better understand consumer needs
• Shifted money from coupons to channel marketing efforts
• Allocated $100 million annually for retailer-specific trade promotions
To be smarter about promoting its brandsTo be smarter about promoting its brandsTo be smarter about promoting its brandsTo be smarter about promoting its brands
P & G is now a leader in its co-marketing efforts with major retailers including Wal-MartP & G is now a leader in its co-marketing efforts with major retailers including Wal-Mart
IMC In Action: P&G
Challenge:Challenge:
Answer:Answer:
Results:Results:
Development of Organization 2005 that:
• Conducted research to better understand consumer needs
• Shifted money from coupons to channel marketing efforts
• Allocated $100 million annually for retailer-specific trade promotions
Development of Organization 2005 that:
• Conducted research to better understand consumer needs
• Shifted money from coupons to channel marketing efforts
• Allocated $100 million annually for retailer-specific trade promotions
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Final Note:
Push and pull strategies are both important to get retailers to sell brandsHere is an analogy:
“We can’t hire you until you
have experience”
“We can’t hire you until you
have experience”
EmployersEmployersto college grads:to college grads:
“We can’t carry your product until
our customers ask for it”
“We can’t carry your product until
our customers ask for it”
RetailersRetailersto brands:to brands:
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