What is trade marketing?
Trade marketing is one of the oldest and primary methods of marketing. In trade marketing, the focus of the manufacturer is on the point of sale and value chain. By marketing your products to retailers, you are creating demand for your product in the market before your consumers buy it. Trade marketing is the oldest form of marketing, is used by both small and large businesses to market their products.
Have you ever got convinced by a local store owner to buy a particular brand of mouthwash when you wanted to buy a different brand? What could be the reason behind this? The seller must be getting more benefits from the seller of that particular brand than its competitors. Yes, this happens because of trade marketing.
Due to fierce competition in the market and the availability of several substitutes for one product in the market, the manufacturers are required to promote their products to middlemen such as retailers, wholesalers, and distributors. These are businessmen who generate their profit by buying products from manufacturers at discount prices and selling them to consumers in the market.
Therefore, we can say that trade marketing is a unique field of marketing in which products are marketed to businesses. Trade marketing is also known as B2B marketing. Trade marketing is used by manufacturers to sell their products to retailers.
Retailers and wholesalers play an important role in the promotion of products to the final consumers. Because of this reason, manufacturers sell products to retailers and wholesalers at lower prices than their competitors and also provide them additional benefits so that they promote your products over your competitors.
Take the example of Pepsi, a beverage. No matter whether you go to a metro city or a small rural area of your country. You can easily find a bottle of Pepsi at both places. This is possible because of the excellent trade marketing of the Pepsi brand. There are many examples of popular brands which, along with spending on expensive marketing methods, invest in trade marketing methods too.
In the article ahead, you will learn about the definition of trade marketing, the best strategies of trade marketing, advantages, and disadvantages of trade marketing.
Definition of trade marketing
Trade marketing can be defined as a marketing strategy that mainly focuses on selling to businesses. In trade marketing, products are marketed to retailers, wholesalers, and distributors so that they can sell those products to final consumers.
Best trade marketing strategies
Trade marketing strategy is your strategic plan to sell your products to retailers so that they keep your product in their stores and sell them to final consumers.
It is important to adopt different marketing strategies to make your product visible to increase the demand for your product in the market.
The first and the best trade marketing strategy that I want to talk about is branding. Branding is essential. It gives identity to your product. Just ask yourself how many times you call your Apple’s mobile phone and not iPhone.
Do you know why this happens?
Therefore, invest in establishing your brand name. It might cost you a little in the beginning, but trust me, it will pay off.
Moreover, think from a retailer. If you are a retailer, whether you want to sell products of a nameless and faceless company or the products of a well-known and established company. I am sure you would choose the second option.
2. Trade shows
Make the use of every trade shows the opportunity that comes your way. Trade shows are also known as trade fairs and exhibitions and take place all over the world. Try to participate in such much as trade shows as possible.
Through trade shows, you will get the opportunity to meet your customers and to share knowledge about your products with them. In trade shows, you can also meet retailers and wholesalers and can convince them to sell your products.
3. Trade promotions
Trade promotions mean the offers your give to retailer and wholesalers to persuade them to buy your products. Trade promotions work quite similar to consumer promotion. You can use trade promotions to enhance your sales and increase your market placement.
For example, you can give your products to retailers at 50% off or with other benefits. However, trade promotions are not advertised like consumer promotions; you are required to meet retailers and give your offers to them.
4. Strategic partnership with already established brands
You can get into collaboration with other already established brands. In this way, you can make your way to be in the market using their popularity. This strategy is a good option for newly launched products.
Advantages of Trade marketing
Trade marketing is one of the oldest methods of marketing and has been a favorite choice of people in the business. Therefore, this marketing is bound to have many benefits.
Otherwise, it would have vanished from the face of others like other marketing methods, which did not get off very well. In this section, I will focus on the advantages of trade marketing. After learning these benefits, you might want to include this method for the marketing of your product.
1. Increase the market presence of your product
The first advantage of trade marketing that I want to talk about is the increased market presence of your product. When you market your product using trade marketing, then you sell your products to local shop owners, retailers, and wholesalers.
These businessmen have regular customers who don’t shop online and don’t go to a big shopping complex. These customers trust the retailer from whom they have been buying things since long.
They would trust the suggestion of their trusted seller more than your advertisements on television. Therefore, by including the trade marketing method in your marketing plan, you are reaching a large segment of consumers that would have never known about your product otherwise.
2. Competitive edge
Using the trade marketing method, you can gain a competitive advantage over your competitors. For example, if you provide the right margin to the seller along with other benefits, then the seller will market your products to consumers over the other products of other competitors.
You can ask sellers to display your products at such a place in-store where they can come in the sight of consumers quickly. In addition to this, you can also provide marketing material to sellers, which they can display in their stores and can hand over materials like flyers to consumers.
3. Secured future for your business
Through trade marketing, you build a relationship with sellers who have been in business for long years and are going to be in business for many more years. Having a strong relationship with these sellers, you make sure that you stay in business for a long time.
4. Improved reachability
The trade marketing method is the best way to reach people who live in rural or far away areas and don’t have many means to buy products that they see on television. If you enter the sellers of these areas, then you will not only increase your customer base but will also improve the reachability of your product.
5. Suitable for both small and big business
The trade marketing method is an excellent marketing option for new companies. Because it is an excellent marketing option for businesses in their initial years when they are not making much profit.
You can contact retailers and give them lucrative offers so that they will sell your product in their stores. However, big or successful businesses already have recognition in the market and have a regular customer base.
However, using the trade marketing method, you can increase the reachability of your product and can make sure that the supply of your product always meets demand.
6. Consistent profitability
Trade marketing ensures ongoing profitability for your business. Trade marketing is a good fit for those businesses which don’t have a clear idea of who their end users are.
You can approach retailers and can give them good offers to place your products in their store.
7. Trade marketing is the best option for products which don’t require upgradation
If you are selling products that don’t require up-gradation in the future, then trade marketing is the best marketing option for you. Because there is no need for you to contact your customers directly.
You can reach them through retailers and wholesalers.
Disadvantages of trade marketing
1. Huge margin
Retailers usually get ready to sell or promote your products to their customers if you provide them huge margins on the selling price of products. Because they also want to make their share of profit by selling your product in their store.
Giving a huge price margin to retailers lowers your profit.
2. No direct contact with customers
By selling through trade marketing, you don’t get to contact your end customers. In this way directly; you will not be able to learn about their needs and demands.
You will always have to depend on the retailer to learn about the complaints made by your customers.
3. Low return on investment compared to other marketing methods
Trade marketing is focused on individual retailers, unlike other marketing methods that are focused on a large population. Moreover, in trade marketing, you are required to provide large price margins to sellers, which reduces your profit margin.
How to create a product trade marketing strategy?
The trade marketing strategy consists of similar steps as that of other marketing strategies, along with a few additional steps. In this segment of the article, you will learn about what actions one should follow to prepare an effective trade marketing strategy.
1. Perform market research
The first and foremost step of trade marketing is the research of the market you want to enter. It is a good idea to learn about the market in-depth before putting your money into it. Learn about the needs and demands of your target audience.
Find out who are your direct competitors and learn about their products and strategies. You can use this information in preparing your plan and deciding the market price of your product.
Moreover, by conducting thorough market research, you can learn about the business opportunities available in the market that you can exploit for your benefit.
2. Learn about current market trends
The next step for preparing a trade marketing strategy is to learn about the current trends in the market. Learn about the buying behavior of your target audience and then add a little bit of innovation from your side to make your product stand out of many products in the market.
The second step is crucial, and one should not skip it as knowing the latest market trends will reduce the risk of failure.
3. Design and develop your product
Once you have all the vital information like the market that you want to enter to latest trends of that market. The phase step is to design and develop your product. Keep in mind the critical points you have learned from the above two steps.
Make sure that your product fulfills the need of people and can also make the best choice among all the similar products available in the market. Designing of the products includes the shaping and packaging decisions of the product.
Choose packaging that complements your brand and the qualities of your product. The choice of colour of the packaging of your product will make your brand stand out among all other similar products in the market. For example, the Nivea brand sells its products mostly in blue and white colors.
Therefore, choose colors and shapes that will not only make your product look attractive but also reflect the qualities of the product.
4. Establish your brand
The fourth step is very important, especially in modern times. The brand name is so important for a company that companies spend millions of dollars on getting the right brand name and tagline.
Therefore, you are never going to regret investing in establishing your brand name. The retailers will want to keep your products in their store if you have a stylish brand name. Moreover, in the present time, people make their purchasing decisions based on the image of a brand.
Prepare your selling material, promoting your brand name and products. Having the right brand image will give you instant superiority over your competitors.
5. Prepare your product proposition
Prepare your product proposition that you want to give to the retailers and wholesalers. Do proper planning and do your math before providing an offer to a retailer or wholesaler.
A thoroughly prepared product proposition will help you get your profit as well as keep the retailer and wholesalers happy.
6. Create your advertising agenda
Work out your advertising and PR agenda. You are required to do the right promotions of your product so that more and more people know about your product and start making a query about the product from the retailers and wholesalers.
By doing this, you don’t have to make so much effort to convince retailers to keep your product in their store. They will themselves want to keep your product to fulfill the demands of their customers.
You can go to trade shows or run different marketing campaigns to make your place in the market.
7. Execute your plan
The last and final step of the trade marketing process is the execution of the plan. Execute your plan. Be patient and make changes in your project as per the need of the hour.