Trade Based Brand Equity - (TBBE)

Trade Based Brand Equity - Its much more than Sales + Trade Marketing
Trade Based Brand Equity - Its much more than Sales + Trade Marketing

Let me tell you a scenario we all know…. still I want to tell you….plz hear meπŸ˜‹, as I have faced this multiple number times in my life till date..!! I am the sales manager or trade marketing manager of a brand A. There is a distributor/retailer/customer (in case of B2B) in one market who we know very well. I being the local sales person visit him once every week. I call him twice a week. I have never missed wishing him on his birthday. I also ensure I send a cake to his house on his anniversary and simultaneously call up his wife to wish her also. I know his children by name. During my last anniversary, I invited him with his family for dinner which he obliged. To my pleasant surprise, during his child’s birthday, he called me up to invite my child to his home. I personally went to buy the gift for the birthday. Whenever my senior’s in the company or Head-office marketing team/senior management visit my territory, I do ensure that they meet this distributor/retailer/customer. I have personally vouched for his presence in Pan-India meets and have been successful couple of times. In a nut-shell I have a very strong relationship with him. πŸ‘

But…..but…..but……he doesn’t do business with brand A, rather he buys competition brands…..or he does business with brand A, but the SOB(Share-of-Business) remains almost the same…on the contrary other competing brands are increasing their share in his business 😳

What do you think is going wrong??  Relationship management is one of the key areas of business management, which seems to be perfectly well here….so what’s wrong 😟?? It’s Because….the sales manager/trade marketing manager has a strong PERSONAL RELATIONSHIP but less BUSINESS RELATIONSHIP…..!!.....wait a sec…are we saying a personal relation is not required??.....NO, I am not saying that…a personal relation is very much required….in-fact it’s the start-point of the relationship…..but then it has to translate into a profound business-relation…..ideally both should co-exist….this leads us to the main question…..what is a business relation..??😟. Before we try to arrive @ the answer for this, let’s take a quick detour about “Importance of Trade Brand”, which will further help us to arrive @ the business-relation answer.

    Watch the summary snapshot

    Importance of Trade Brand?

    Importance of Trade Marketing - Its the route-to-market and connect for a company with the consumer
    Importance of Trade Marketing - Its the route-to-market and connect for a company with the consumer

    1st for a brand to sale in distribution-based business…Trade is the Route to Market…so called RTM

    Furthermore, as we reach nearer to the consumer, the numbers of traders go up rapidly….so for example…one lubricant company/brand catering to 500 distributors who sales to 35000 retailers…who cater to 1L mechanics…. who in turn try to serve 20 Cr vehicle owners.?!!!
    There can be more/less number of levels involved based on business-types , say for example tire companies till very recent used to serve directly through Retailers, with no distributors in between & continue to do so in some of the product lines, whereas there in certain FMCG brands who have 5 layers of channel (traders) to reach out to the final consumer.

    2nd the connect between the end consumer & the brand/product/service is through the trade…..which means the traders are the sales team which sales it to the end consumer….😳…

    This means what they say/how they say….becomes important in the consumer purchase….!!...well…now that’s’ important…..the Retailer (Point-of-sale) is the interface between the consumer & the trade brand…!!

    Hence, Trade Management becomes a highly important part of the business…one where substantial investment in terms of resources is made by the company…. hence the importance of Trade Brand (Read:Consumer Brand or Trade Brand) becomes paramount for company’s success.

    Apart from reaching to the consumers, the trade is important for the company due the following reasons also:
    • They are generally local & hence have better understanding of the local market & way the market in that locality operates
    • Since they are near to the consumer, they provide prompt & better service to the customer for ex: handling complains, quicker supply etc.
    • They can provide credit in the market & also collect the same
    • Localized campaigns in line with the market demands can be done by them keeping in mind the local sentiments (for ex: campaign in Kolkata during Durga puja, in Ahmedabad during Navaratri, in Mumbai during Ganesh puja etc)
    • They are the eyes/ears of the company for all developments that happen locally, including competition activities
    Help in translating personal relation to business transaction
    Personal relation should translate to business relation

    Now let’s come back to the “Business-Relationship” point. The output of this “Business-Relationship” is an equity which helps the company/brand and the trade to seamlessly operate together to deliver the best possible solution to the customer. This means if the output is favorable, the customer experience is memorable, but if “business-relationship” is not cohesive, it may result in customer dis-satisfaction, customer-loss and even closure of the business in that market/with that customer 😳. This output in one word is referred to as “Trade Based Brand Equity” or “TBBE”. 

    Let’s try to arrive @ what it exactly means by “TBBE” instead of straight-forward answer.
    Since there is a word called “Relationship” in business-relationship, hence it must be interactive i.e. to say a 2-way process between the stakeholders i.e. the company/brand & trade. This means there needs to an “contribution-expectation” management between the 2 i.e. both needs to contribute to meet the expectation of the other, which finally results in the right output for their customer…. i.e. the end-consumer πŸ‘

    Now, for the expectations that the company has from the trade, the onus is again on the company to deal with trade in such a way that it delivers aligned to the company’s goals😜…for expectation of trade from the company, the company needs to meet up by its contribution…

    So in a nut-shell, the company needs to contribute in such a way that both its expectation and expectation of the trade is fulfilled.πŸ‘

    What is the Trade’s objective in joining hands with the company???

    Most important point-of-interest for a trade is to grow his business alias sales alias ROI
    Most important point-of-interest for a trade is to grow his business alias sales alias ROI

    The company’s has multiple objectives it plans to achieve from the Trade, the question is what is the trade’s objective in joining hands with the company?
    Once we know the Trade’s objective, steps to ensure that the objectives are met, will help in growing the Trade Brand.

    Trader is FINALLY looking for a business, by selling the company’s brand to the consumers & making monies in terms of margin and Turn-over discount. Kindly mind my word, he is looking for a business and hence not personal consumption(although he way use it but that’s not the core objective), therefore the way he will behave is very different from the way the consumer (user/final buyer of the product) will behave, hence the way to make a Trade brand will be tactically different from making a consumer brand.

    If one asks around what is the most important thing that a trader is looking me, you will get a fixed set of answers. They are generally…low buying price, higher credit period, more schemes/discounts, better service, more company support in terms of branding, campaigns, more products, more ATL like TVC etc. To tell you maximum of these are tools like branding, campaigns, ATL to increase the footfalls/sales/business of the trade. Others like low buying price, higher credit period, more schemes/discounts etc is for reduced investment. Now, trade is going to make investment (more or less), if & only if he/she earns from that investment, which again means increased footfalls/sales/business of the trade.😊

    Hence, the solo expectation of the trader is to GROW his/her business by partnering with the company/brand. Hence, to enhance “TBBE” the company needs to contribute to meet this expectation of the trade partner.

    Wait a sec…. I think we are missing something 😯. While choosing an airline, have you ever considered safety as a factor??...i mean will you ever fly an airline where it may crash!!….even u get the ticket @ cheap price….or even free…..or may-be they pay you if you fly with themπŸ˜‚. Which means safety is assured…. similarly, in case of the trader, he/she is making an investment in the company/brand, so losing money is not an option. This means he/she is not going to invest in cases where he/she may lose money, which can happen if the company/brand is not established...i.e. to say it has chances of closing…. or it mayn’t be that serious towards that product line…so it closes.
    Hence, new/unknown brands or company/brands who are yet to make the required investment in India, find it difficult to get the right trade partner.πŸ˜„

    Hence, the fundamental hygiene factor for a trader is the seriousness with which the company/brand is doing business in the market. The seriousness needs to be clearly visible in terms of the investment the company/brand has made/about to make & their way of working in the market. It’s a very important start-point for TBBE & more importantly it stays through & through during the entire relationship period between the company/brand & the trade.

    So, given the hygiene factor of “seriousness of the company/brand” is in place, let’s go back to the main motto of the trader…. ways of growth for the trader.

    How can a retailer grow his business?

    Since you are a brick-mortar store, under all reasonable assumptions, you can’t grow the physical area of the store and hence your now you are being a retailer, let’s look @ the ways you can grow your business….
    • Increase in number of customers in your shop
    • Sale the product @ the highest possible price
    • Sale more premium products/futuristic products or sale a range of products to one customer instead of one/two products.
    • Buy the product @ the best rate from the company
    • Get the product/service in right quantity in right time from the company
    • All other support from the company/brand to keep the retailer’s commitment in the market

    Increase in number of customers in your shop

    Well, that’s the age-old clichΓ©…. right…number of customers go up….so does your business…. well it’s the age-old clichΓ© & the best way also…. most sustainable & definitely the most difficult… πŸ˜ƒ

    Now for a Retailer, who physically can’t increase the size of his shop (that’s the easiest way, so we keep that out), to increase the number of customers (called footfalls), the retailer/company/brand needs to lure the customers to the store….so the million dollar question is….how to lure…πŸ˜„.

    Let’s look it from the other side…. we all are consumers…. think what’s that makes us go to a shop:
    • We don’t have to search for the shop—Proper Retailer Branding (Signage, Pillar Branding etc.)
    • It’s neat & clean, well maintained- Proper Retailer Branding (inside branding, racks for stacking etc.)
    • The staff is well groomed & behaved- Proper Retailer Branding (Merchandise items, T-shirts etc. for shop boys)
    • Explains the product correctly whenever asked by the consumer—Retailer Training on Product & Company
    • They don’t make you wait @ the shop for long—Retailer training of managing customers
    • Gives you original products (no duplicates/fake)—Certifications from Brand/Company
    • Doesn’t overcharge—Retailer wise plan where the right selling price (Retail price/MOP) (Read MOP MIRAGE) is arrived to maximize profit & sale.
    • Doesn’t change price based on consumers (consumers then feel cheated even if they get the best price because they can’t believe that it’s the best prize they got)- Retailer wise plan where the right selling price (Retail price/MOP) is arrived to maximize profit & sale
    • Brings in an element of delight sometimes - Small give ways like company branded pens, key-chains, another token give-away for the consumer

    Sale the product @ the highest possible price

    That’s the dream….right….if you are a retailer….make the highest margin per sale….!!...The problem is the same brand/product is also sold by the near-by retailer….customers start feeling cheated when you charge more for the same product….the Market Operating Price- MOP, (Read: The MOP Mirage) is determined by the market….so how can you being a retailer charge more than the market….it’s impossible… it??  😟 …. are you sure….?

    Well the MOP is average price…. which means…few retailers charges slightly more & few slightly less…. let’s look @ the retailers who charge slightly more…. how the brand/company helps/can help the retailer to do so….

    To answer this, lets again move to be a consumer…. when are we ready to pay slightly more…? KNOWINGLY...!!...mind my words please…. Knowingly paying more….

    We knowingly pay more when we feel that other services the retailers provide over-compensates the extra money, he charges….so what are those other services…lets list down… (apart from the ones listed in the earlier point)
    • He is cordial while dealing with you’-- Retailer training of managing customers
    • He keeps his promises, like he says that any defective item will be replaced @ no question asked policy-- Retailer training of managing customers
    • He is there to supply you in wee hours…sudden requirements of anything he arranges it for you- Retailer training of managing customers
    • His products are generally not defective
    • He doesn’t try to sale you anything, but always tries to understand your problem & suggest solution- Retailer Training on Sales techniques
    • There have been cases, where his recommendation to opt for a brand/product has reduced your expense- Retailer Training on Product & Company

    Sale more premium products/futuristic products from the range of products your sale

    Generally, it’s been observed that Retailers have a substantial amount of captive customer among its overall customer base, the percentage of this captive customer base varies from somewhere around (35/40%) for retailers located @ highways to 90%+ for retailers located within residential areas…!! Hence, broadly the retailer is quite familiar with many his customers…. which is an opportunity for both the retailer & the company/brand to up-sell/sell premium products/try out futuristic products…. /cross-sale (sale related products to the product the consumer is buying)

    I have seen this missing largely from the sales team effort of the company…to understand the consumers who buy from the retailers….the retailers in India is generally not so educated to do that exercise by his/her own….so the final result is a big opportunity like new product trials (futuristic products), making a premium product base … lost out where all the 3 parities will be highly satisfied…
    • 1st the consumer…because he is getting a better product…
    • 2nd the Retailer….as he is making more margin & with increased consumer loyalty…as premium consumers tend to be more loyal…
    • 3rd the company/brand….as they make more money…. increases the stake of the retailer in the brand (with increased earning & investment by the retailer) …. & test new products/concepts etc…which make them stay ahead of the competition….

    Buy the product @ the best rate from the company

     Maximum of the focus of the Retailer & the Sales team is on this….a surrogate of this is called discount….so you track any discussion between the retailer & the company sales person….there are very high chances that they would discuss scheme in their discussion….if not the entire discussion is ONLY on scheme……😳😰😯

    Well, to start off…. the industry has gone across to define different synonyms of discount….
    • Discount—A reduction in buying rate of the product
    • Scheme—Discount on a certain purchase value/volume/product which is time bound
    • Turn-Over-Discount—Generally “Scheme Extended over all products for a longer time” against a target of value/volume or both
    • Spot/Flash offer/Todays special etc.—Scheme for a very short period (1-7) days

    Finally, all this reduce the buying price of the product to the retailer…πŸ˜ƒ

    Is It important??...YES, IT IS…Rather Its Mandatory…it’s to be competitive & also a carrot for higher push sales…but the problem is…. generally, it’s the only point/major point that’s acted upon...!!

    Hence, Trade marketing is always considered as Push Marketing (You push the products to the consumer with a reason) …. whereas Trade Marketing, as discussed in the earlier points, can also be Pull Marketing (The consumer come and ask for the product). The Pull Marketing job is left to the Consumer Marketing.

    Here the company sales team has a big role to play, mainly to access the retailer’s customer base & his potential to sale…. else…its results in excess stock building @ retailer end which results in lower profitability for the retailer & decreased sales in months following the scheme month…

    Let’s take an example to understand this….say a retailer sales 3 brands…A (100 units), B (50 Units) & C (30 Units) per month…which means he sales (A+B+C=180 Units) per month….& let’s assume he carries a stock of 15 days (i.e. stock equivalent to 15 days of Sale), which is 90 Units, brand-wise in proportion to the sale ratio. Sale of 180 Units/month translates to 180 customers who buy from his shop every month (assuming every customer buy 1 unit) and those customers have preference of different brand A, B & C as per the brand-wise sale number discussed earlier. Now, during scheme, if Brand A sales the retailer 120 Units instead of 90 Units (which is around 33% increase), the retailer is left with 2 options:
    • Sale (120-90) = 30 Units more of Brand A to customers of Brand B & Brand C, which will keep his sale to same level of 180 Units/Month. This doesn’t increase the business of the retailer but increase the business of the Brand A through the retailer. Hence, the retailer waits for more lucrative scheme from other brands (B/C), so the final result…it becomes a Game of Schemes….One month Brand A gives more scheme, retailer buys more of brand A & less of brand B/C….Other month Brand B/C gives more scheme so the retailer buys more of B/C & less of brand A, so over a period of time the increase in sales becomes nullified & the overall sales remains the same…!!...
    • To lure new customers to the store, to increase his overall business from 180 Units/month to @lest (180+30) =210 Units/month (because every new customer will not land up buying brand A). This is where the retailer is really interested as it grows its overall business. The question is, from where will one get the new customers??.....It’s the same customer who will (under most circumstances) buying from some other store..!!....So it’s primarily poaching customers of other retailers …for which Brands do Campaign in front/inside the retailer’s store….gives gifts to customer etc. …to lure him…. 

    The irony is brands do campaign/gifts etc. @ many stores in one market…. which means this idea can’t increase the overall consumer base of a retailer for a longer period. Hence, there seems a disconnect between the primary objective of the retailer & the brand/company…😡.

    Brand is looking to take share from competitive brands, so do campaigns/give gifts @ as many stores so that the customer converts from competitive brands to that brand….with/without the overall growth of the retailer…..on the contrary, the objective of the retailer is to increase his business, which (by his experience) can’t easily come from increase number of customers (as brands will do campaign @ multiple store in the same market). So, the best way for him is to increase his margin in the same sale, one way is more discount…. hence the discussion generally remains centered to discount & not on growth...!! πŸ˜ƒ

    One way out for this, which only a handful of brands does, is to understand retailer’s customer base (many times the retailer himself is also not clear about his customer base) & plan retailer-wise the schemes, which grows his business…. both by increase margin/sale as well as from new customers. The sales/Trade marketing team needs to work parallelly on tertiary along with secondary, if not only on tertiary.

    Product/Service support in Right Quantity & Right time

    The company plans to focus on a brand/product/service, objective is to quickly mop up sales & increase market share in that category. Hence, comes the big M&S plan…360 degree approach, with tightly knitted IMC(Integrated marketing campaign) with apt sales support both in terms of schemes & on-ground activation. The sales team has been told to work on tertiary to ensure liquidation, which will be supported by the big ATL. Hence, the sales team along with trade marketing goes for demand generation by working in tertiary along with the retailer & thus arriving @ the corresponding secondary ordersπŸ‘‹πŸ‘.All set, the first round of orders were very encouraging…within a week comes the 2nd big order @ pan-India level, as the trade is now motivated by the initial liquidation level.

    Suddenly, the indent is rationed to half…!!.... the other half to be supplied after a week 😳😲. Plant can’t generate the required supply…or…. the product is ready (in case of product-based businesses) but logistics can transport it within the given time 😡. Or maybe, the shop-floor supervisor, unaware of how big this campaign was, changed the production batch to some other product, which has a turnaround time of 5 days...!!...So wait for next 5 days till the remaining supply comes πŸ˜‡.

    Proper induction to all the other departments who are directly related to trade, goes a long way in building TBBE. The induction needs to be in both classroom & on-market training & should involve all key-stakeholders of other functions which includes both senior personnel & people who will directly handle day-to-day activities. Furthermore, this induction needs to be regular aligned to the training calendar

    From the discussions till now, the Trade Based Brand Equity (TBBE) needs to aptly play on the 
    3B’s --- Business, Branding, Bonding

    3B's of TBBE

    3B's of TBBE - Business - Branding - Bonding
    3B's of TBBE - Business - Branding - Bonding

    Key Take-away- Business

    Business caters to all those points which were directly related to commercial, product, service etc. As discussed, companies need to work on the tertiary & not on the secondary…i.e. to say it needs to aim @ increasing sale of trade & not focus on its sale to the trade. The first step towards that is to make the start point aligned to this goal.

    Job role, sales policy, KRA/KPI of sales/trade marketing & all other functions which directly deals with trade, more tertiary oriented.

    Furthermore, all allied resources to be directly related to tertiary, then the entire focus of the system moves to “liquidation @ secondary” & not “sales @ secondary”.

    “Sales-enablement-tools”, which currently is primarily used for tracking & measurement of trade data, to be made commercial oriented with major/if not all incentive to trade (in terms of schemes/discounts, turn-over-discount etc.) to be based on tertiary and not on secondary/primary.

    Key Take-away- Branding

    I have seen a clear-cut discrimination in organization when they are doing branding@ trade to branding @ consumer. I really fail to understand why??...Till the time your sellers (trade) where the customer buys the product is not well-branded, how do you expect to make your brand to make a lasting impact on your consumer. This doesn’t mean investing the same in both cases, but the broad approach /seriousness needs to be the same, else customer will buy your brand @ think they have bought a competition brand 😨😁

    A proper on-ground-visibility strategy needs to in place for a duration of minimum 2/3 years, with complete detailing of resource allocation i.e. 3M – Manhour-Monies-Machine.

    On-ground branding started with the basic concept of “brick-mortar”, where consumers need to reach out to the trade to buy. Well, that still exists, but with digital being so effective, the companies/brands are missing the opportunity to reach out to the consumer with the retailer brand…. because he/she is the local guy from where the consumer will buy. Trust me, it would really motivate the trade to perform better even in worst cases, the campaigns don’t give very encouraging results. πŸ‘

    Companies/brands need to use digital optimally to increase the brand-presence of the retailer locally, which not only drives traffic to the trade but also motivates them to perform better. 

    Key Take-aways- Bonding

    When chips are down, you come to know your real friends πŸ˜ƒ …age old clichΓ©…right…but it’s holds good till now & will probably be true eternally. This is the element of bonding…. which is “business & beyond” when it comes to trade. Bonding of trade partners ensures you don’t sink in your tough times as they will continue partnering you. Hence, the concept of “Loyal Retailers”. The trade-loyalty-programs run by companies is a step towards that, but it’s not enough. Sales/Trade marketing teams do take EQ (Emotional Quotient) i.e. moving to personal space (like anniversary, birthday etc.) of the trade, but that’s not enough. Brands need to move a step ahead and help the retailer bond with its customers. This where bonding will also add value to the retailers. M&S plan needs to add this element of Bonding along with Business & Branding to integrate it seamlessly in regular business model.

    Companies /brands to have Bonding factor @ both levels i.e. first @ trade & second the customers of trade, which needs to be part of the annual M&S plan with clearly defined actions & deliverable

    The 3 B’s are an integral part of TBBE & hence the trade becomes the interface between the company/brand and the consumer in true sense of terms.

    If all the 3 B’s are well planned & executed, then Both Trade marketing & Consumer Marketing will play the role of “Push & Pull” …the contribution of “Push” will be more for Trade marketing & “Pull” more for Consumer marketing…how much is the contribution will depend on the industry type & competition landscape.

    The trade that we talked about is in business with the company/brand, which means that scope of relationship doesn’t restrict to product/service but extends across to all other dimensions of business like marketing, sales, delivery, finance (like timely payment), service, customer complaint support, product replacement, company & brand image etc. etc... which can be addressed keeping the 3B’s!!

    Hence although the front-face for improvement of “Trade-Based-Brand-Equity” is the sales & the trade marketing team but the responsibility is on the combined effort of all the functions which has a direct relation with the trade. After-all, to have a robust- trade network is one of the biggest assets and a sure shot competitive-advantage for the company. πŸ‘

    CπŸ˜„πŸ˜„L  if you have read πŸ‘†
    Will be CπŸ˜„πŸ˜„πŸ˜„LER if you commentπŸ‘‡
    Will be CπŸ˜„πŸ˜„πŸ˜„πŸ˜„LEST if you 


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