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 me😋, 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. 👍
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
1stfor 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.
2ndthe 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
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 👍
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.👍
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
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 @...trust 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 them😂.
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.😄
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 business.....so 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 cliché…. right…number of customers go up….so does your business….
well it’s the age-old cliché & the best way also…. most sustainable & definitely
the most difficult… 😃
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…😄.
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…..is
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 …..is 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…😃
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...!! 😃
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 orders👋👍.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 😇.
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
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. 👍
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 😃 …age old
cliché…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. 👍
Ever since evolution few defining characters of Humans…
They areAnimalswho are genetically a self-Trainer and Ideator…hence they continue to be @ the top of food chain…
The urge to explore made themRoad Tripper by nature….
The genesis for continuation of any form of life…knowledge sharing with next generation…humans formalized and Standardized…its now called Education…
I also have all those in me like all other humans…only submission…I loved those & they are my passion…
About my Blog
My blog intends to bridge the gap between the sales & marketing theories taught in MBA schools and the requirements of Indian corporates.
I have leveraged my multi-industry expertise and teaching experience across various MBA schools in integrating academics to practical aspects followed in Indian market. At the same time, I have tied to keep the content simple to understand, easy to implement and more relevant with respect to the corporate sector in India
It shall be helpful for all those marketing & sales guys who...
Have just completed MBA or going to complete it…
Young executives in sales & marketing without a formal education in management…
Young-mid level managers looking for a role change
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