Strategic Sales

Trade Marketing

Cinzia Angeli - Alessandro Vigni 1

 Strategic Sales & Trade Marketing
• P&G Model
• Trade Marketing: Key concepts
– Shopper vs consumer
– ZMOT, FMOT, SMOT
– Channel, customer, shopper, category understanding
– Sales fundamentals
– Value for Trade concept and tools
• Trade Marketing Plan: How to exploit
– Map
– Understand
– Plan
– Communicate
• Strategic Sales: How we work 2
 P&G Model
Strategic to the business since
creating value for shoppers, customers and P&G brands

Our BRANDS Our CUSTOMERS

FOR Shopper

Our mission: Win with the shoppers in all channels

 Customer vs Shopper

Where to buy = Customer

Person that buys = Shopper

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Trade Marketing : key concepts
 Consumer vs Shopper

Person with needs = Consumer

Person that buys = Shopper

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Trade Marketing : key concepts
 The distinction between shoppers &
consumers

• First Moment of Truth (FMOT)- the moment when the shopper chooses the products in the
store. The shopper may come to the store with an item on their list, but once they get to the
shelf, they may purchase a different flavor, a different size, a different brand, trade to a better-
performing or better priced product or choose a product from an entirely different category.
• Second Moment of Truth (SMOT) – the moment when the consumer use products. This
includes studying and understanding the consumer needs and desires

We must win at FMOT before a shopper can

become consumer!
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Trade Marketing : key concepts
 MOMENTS OF TRUTH

Zero
First

Growth

Second
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Trade Marketing : key concepts
Trade Marketing : key concepts
 Win in the
First Moment of Truth is crucial

TRADE MARKETING and Sales

Organization manage the FMOT

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Trade Marketing : key concepts
 Marketing Activities
• “Above the line" marketing activities to consumers and
shoppers as advertising on air, print, internet, outdoor,
social media, trial campaign

• “Below the line" marketing activities to retailers for

shoppers: folders, in store promotion, fidelity
program,collections, in-store visibility, display,
comarketing....

FMCGs: Split between above and

below the line 50/50

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Trade Marketing : key concepts
 Why Below the Line activities are important

Research reveals the importance:

 On average, 84% shoppers claim to plan the purchase of the
category
 61% shoppers claim to plan the brand
 More than 50% switch the brand in-store

Yet we spend many times more on “traditional/above

the line” support than on in-store support/below the
linea
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Trade Marketing : key concepts
 Trade marketing
business sustainability
Squaring
Company
the TSR
(Sales, Profit and Cash)
financials
between Consumer Customer
Shopper
Company (Win ZMOT,
Profitable
category
growth
and FMOT and SMOT)

Customer
 …through designing G2M
strategy
Leverage consumer research and shopper behavior
Develop assortment, shelving, promo and pricing strategy
Deliver brand objectives

Assortment

Promotion Shopper Shelving

Pricing
 Trade Marketing: what is it?
Trade marketing is the application of marketing
techniques to Retailers to reach/win with Shopper

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Trade Marketing : key concepts
 Distribution

Hypermarkets:
They are located about 8 kilometers outside the city center, with an area >2,500 m²of exhibition space.
Current trend shows that assortments are developing in consumer-durable (non food) products such as electronics.

Supermarkets:
Supermarkets are a type of Medium distribution store. Supermarkets are retail consumer product self-serves with an area between
400 m² and 2,500 m², with < 10 cashier counters. They are mainly located in town centers and often represent the first store choice
for food and detergent shopping.
Supermarkets usually have surface and shelf space constraints, so they tend not to accept invasive secondary placement and
assortment extension.

Discounters:
Stores with an area of about 600/1000 m². They are characterized by a relevant presence of unbranded products which are normally
sold at lower prices compared to other channels, also thanks to lower logistic cost.

Drugstore:
Stores with smaller areas, characterized by the absence of food. Focus on the assortment and sales assistant training make the
very big difference comparing to other distribution channels.

Confidential P&G Information – not to be copied, shared or disclosed without the written permission of P&G
 How: l’esecuzione Il marketing mix
Sales Fundamentals should create a superior value
proposition for Shopper
Value for trade should be provided to win in FMOT – via
TRADE Marketing
PRODUCT

VALUE FOR
VALUE FOR
CONSUMER

PRICE

TRADE
PLACE

PROMOTION

SUPERIOR VALUE PROPOSITION for Shopper

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Trade Marketing : key concepts
 Value for Trade

1. Sales Fundamentals (channel, sizes, promotions)

2. Trade terms (payment, delivery…)
3. Shopper marketing / Differentiation
4. TiTuTa (Trade in, Trade up, Trade across)
5. Promotion analysis
6. Pricing sensitivity analysis
7. Logistic lower costs – e.g. store operations, shrink

Trade Marketing : key concepts

 Trade Marketing
provide value for trade to create a
superior value proposition for
shopper

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Trade Marketing : key concepts
 Trade Marketing Plan

How to exploit
1. Map
2. Understand
3. Plan
4. Communicate

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Trade Marketing Plan: How to exploit
 1° step : Map
(1) “Mapping” all retailers where our product are
(could be) sold: Hyper, Super,...Discount,
Drugstores..Pharmacy .... Gas Station, airport...
(2) How to coverage effectively and succesfully

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Trade Marketing Plan: How to exploit
 2° step : Understand
• Shopper 1 and Shopper 2
Shopper I Shopper II
Household Panel Data Questionnaire

What shoppers do ! Why shoppers do ! 21

Trade Marketing Plan: How to exploit
 2° step : Understand
Key Business Drivers: PHARMACIST - example
Pharmacist Recommendation = #1 Purchase driver!

Established manufacturer and

country of origin: Made in Being touched by brand:
Europe or Germany is an offsite/events/conferences/tra
Specialist endorsement / additional benefit. inings/ organized by brand
recommendation is the key where there is food served
Shoppers demand: and sometimes an
pharmacists tend to entertainment as well.
recommend products that are
more often asked by shoppers. Understanding the
Trust to the product quality: technology: They claim they
via personal use or witness of Price: pharmacists tend to trust more products they have
good results recommend higher priced information about
products. (technology).

 Key arguments that pharmacists use for shoppers: “I tried it”, “consumers like it, it has positive
feedbacks”, “specialists recommend it”.
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Trade Marketing Plan: How to exploit
Source: How to leverage the power of Pharmacist recommendation – Russia 2011
 EXAMPLE Sales Fundamentals In Drug Specialist Product x was
supported by SFT better than top trade (Super+Hyper)

50.0 49.0
45.1 43.5
45.0 43.0
40.0 39.1 39.2
Drug Sp.
35.0
Super+Hypers
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Share of Products Share of Facing Share of Shelf

Source SFT

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Trade Marketing Plan: How to exploit
 Sales Fundamentals Target -example
3Months
Target CY index
Ending Feb

PRIORITY #1 AVG N° OF PRODUCT 10.9 12.0 110

PRIORITY #2 SHARE OF SHELF 13.6 15.0 110

PRIORITY #3 WD DISPLAY 11.4 15.0 132

PRIORITY OUT OF STOCK 21.8 15 69

Positive Building Blocks Negative Building Blocks

New launch
New Ideal Assortment
Single cases vs mixed cases (OOS)
Corporate Promotion
Trade Marketing Plan: How to exploit
Code change in Q1
Single cases vs Mixed cases (avg n.products’s)
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All decisions about shelf, assortment and pricing are at the sole discretion of the Retailer.
 3° step : Trade Marketing Plan

Prepare your proposal

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Trade Marketing Plan: How to exploit
 3° Step: Plan
Trade Marketing Plan – key elements to include
• Sales Fundamentals (Assortment, Price, Promotion, Shelving)
• Category Management/Shopper Based Design
• Commercial Innovation
• Launch & Initiative Management
• Customer Differentiation and Shopper Marketing
• Business Plans

By channel, customers

By period of time (canvass, season,yearly...)
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Trade Marketing Plan: How to exploit
 1. Sales Fundamentals
The basics on how to grow SHOPPER DEMAND
1. Distribution
Right assortment, timings,...
2. Shelving
Blocks (vertical/horizontal), signposts, information,...
3. Pricing
Hi/Low, EDLP,…
4. Promotion
Frequency, Displays, Communication,…

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Trade Marketing Plan: How to exploit
 2. Category Management/
Shopper Based Design
How can the category best contribute to help the
retailer differentiate & meet their overall
objectives & strategies.

Analysis of : - Market Development

- Category (retail & brands)
- Assortment (ABC-Analysis,..)
- Price & Promotion
- Shelving / Planograms
- Shopper Data

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Trade Marketing Plan: How to exploit
 3. Launch & Initiative Management
How to optimize the implementation of new initiatives
by making use of further marketing & sales tools.

Examples: - Sampling & Trial Activities –

- Awareness - Instore Advertising, New
Media (Internet coupons,..)
- PR / Emotion - Events
- ......

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Trade Marketing Plan: How to exploit
 4. Customer Differentiation
How to grow the retailers business through choices
which make him win over competition; how do
manufacturers fit into that plan.

Examples: - Customer specific SKUs

- Restricted distribution of a brand (???)
- Unique Marketing activities
-.....

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Trade Marketing Plan: How to exploit
 4. Customer Differentiation

Factors of the Value Share impacting the Use of Tools

1. Penetration: Classic Media, Outdoor
Posters, Flyers around store,..

2. Share of Requirement/Loyalty Instore Communication,

Store Loyalty Tools, Displays,
Posters, Instore Media,…

3. Spending Index (New) Media, Events, new assortment,…

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Trade Marketing Plan: How to exploit
 5. Shopper Marketing
Identifying the right shopper marketing strategies
(campaigns, store reinvention, relations, POS claims) that
can deliver a win/win with the retailers

Campaigns POS Claims

Shopper Based Design Relationship Mktg

Trade Marketing Plan: How to exploit

 6. Joint Business Plans
How to grow the retailers and manufacturers
business by a joint, longer-term business plan.

Finding the “sweet spot”:

Brand Opportunities Retailer Opportunities

Sweet
Spot

“Building our business through building their business”

(the idea behind Customer Business Development!)
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Trade Marketing Plan: How to exploit
 Trade Marketing plan - customer x
2) Specific plans by Customer: Customer x (5.6%)

Nov Dec Jan Feb Mar Apr May June

Ideal Assortment

30 M Eur
Multibuy with Gadgets

30 M Eur
Shopper Marketing

4000/20 M Eur 2000/10 M Eur

Displays

120 M Eur
Supporto nuovi lanci
 Sales role is strategic

Creating partnership
with customers

Generating value
 Sales: How we work
Creating partnership with
customers

Multi-functional leadership
• From competence only to lead a team
Great collaboration style:
• Needed to manage a matrix org. (Sales and other functions, Global,
Regional, Local)
Align priority multi-functionally
Focus on big bets…it is impossible to do everything
Balance, Balance, Balance
• Customer, company, consumer
• Global, Regional, Local
• Etc.
 Sales lead
multifunctional teams to:
• Align strategies
• Exchange capabilities and competences
• Bring to life commercial strategy
• Achieve (for both P&G and retailer) higher results
than what they can do separately

Why Multifunctional
approach:

Customers structure evolution from one

man show to multifunctional capabilities
Creating together Superior Value
Generating value

Dr ive Profitable Category & Total Store Growth with

o ur Brands
Sales
Growth

# of More Better Larger

Shoppers Visits Closure Baskets
Profit
Growth

Total
Margin
J o int Business Plans

Shareholder
Imp rove Cost to Serve Improvement
Return

M o ve to a sustainable Business Model Cash Flow

Growth

Asset
Reduce Inventory
Efficiency

P&G Total Shareholder Return Model

JOINT VALUE CREATION
Generating value
J
O
I
# of N # of
shoppers buyers
T
Sales
Growth
Trips
B How often
Sales
Growth
they buy

Profit
U
Profit
Growth
S Growth

Total
Margin Closure
I How much Margin
Total
Shareholder they buy Shareholder
Improvement Improvement
Return N Return

Cash Flow E Cash Flow

Growth
Growth
Basket
S Price
they pay
Asset S Asset
Efficiency
Efficiency

Cost & P Cost &

Customers Cash
L
Cash

A
N
ONE PRINCIPLE
 Consumer is the Boss

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