One major area of differentiation between ‘conventional’ CPG company sales teams and emerging brands’ sales is the focus on trade management & trade expertise. The reality is that emerging brands are not placing the level of focus against this major cost / investment area that is required to maximize their opportunities. In many situations, it is a virtual ‘unknown’ until after the deduction arrives.
There are a few realities here:
- Trade spending represents well over 20% of gross revenue – certainly enough to justify significant focus with a clear leadership & organizational strategy. With new distribution, this can increase to well over 30% with slotting, free goods & other charges.
- Trade management is complex – it starts well in advance of an annual plan, is integral to the annual planning process & continues through execution. The deduction clearing (and repays as needed) are simply cleaning up after the fact – not the core of trade management.
- Ongoing analysis at a total brand level, direct customer level & indirect retailer level is key to successful growth. Trade is typically over 80% of the total marketing budget for most CPG manufacturers.
While most emerging brands cannot support a Trade Marketing team, this area should be a primary focus of sales leadership & all of sales. I’m not sure how a sales leader spends a day without time on trade planning & trade analysis. Yet, the recruiting process for trade management is seldom listed as a key responsibility for sales leaders in job descriptions.
There is also a major opportunity to outsource this trade leadership through fractional expertise.
Trade spending can & should be a major contributor to brand growth & profitability as well as a partnership opportunity for key retailers. The key is to embrace this area & secure the necessary expertise.
Any thoughts?