There are few emerging brands that have not expressed significant frustration & even exasperation with trade spending. The reality is that this has been around for decades in CPG (since the 1970’s), is a key part of the marketing budget & sales process & is here to stay for at least the short to mid-term. And, it’s a big deal – typically well over 20% of a brand’s topline revenue.
Unfortunately, many emerging brands’ initial exposure to trade spending is through the payment process – deductions. Like trade spending, deductions have been a ‘form of payment’ for distributors & retailers since shortly after CPG manufacturer’s initiated spending these dollars to increase sales. Deductions are not the focal point of trade spending, but simply the ‘clean up’ process after everything has been planned, negotiated & executed. More on this later.
So, who’s accountable for this area? After all, it is well over 20% of topline revenue. It’s not hard to calculate – it’s real money. And, it touches many parts of the organization. While sales & finance are on the front end here, marketing & even manufacturing & logistics are involved. If there’s a promotion driving 5 to 10 weeks business at a key retail partner, someone needs to make the extra product & have it at the right spot, no? Obviously, it is a critical component to leadership & the investors as variances have major ramifications.
So, who leads, coordinates & manages this process at an emerging brand?
Finance typically does not have the experience in this area (it’s complex) & it’s well beyond the Band-Aid of hiring a bookkeeper.
Sales understands the execution process, but lacks the time needed to analyze, plan & revise on a continual basis – it’s not a ‘once a year’ activity. Few emerging brands are providing enough compensation to their broker-partners to address this issue.
Larger CPG manufacturers either have more significant sales staff (with deep industry experience) or a ‘Trade Marketing’ department. These teams are critical to the organization in leading this trade spending process.
How Does an Emerging Brand Win through More Effective Trade Spending?
There are clear benefits to hiring the right partner. A clear plan & clear process can get your team focused & capitalizing on these opportunities, while building your retailer partnerships through collective business growth. With Schroeder & Associates these areas will be addressed:
- For starters, your team will understand the market from a trade perspective like never before.
- There will be clear roles & responsibilities throughout your team (including your broker-partners) around all areas trade related.
- We will assist in procuring, installing & training on any software if needed.
- You will have clearly defined processes across your functional areas around trade spending.
- Your team will focus on facts & analysis for upcoming decision making.
- You will proactively drive a more successful & profitable trade process.
This will result in stronger customer relationships & improved decision-making in achieving your financial objectives.
Contact us for an initial discussion on how to drive this success.