Trade promotions are a rather loose category. In general, they are classified as any promotional approach that hits these two criteria:
- They are driven and planned (even if not wholly executed by) product merchandisers
- They occur within the point of purchase, i.e. retail
Meeting these, trade promotions can range from end-of-season sales to having brand ambassadors raffle off factory tours. The total scope is rather large, but we distinguish these promotions in four main families: modified pricing strategies, retailer contests, off-shelf branding, and on-site events.
Despite their potential to increase sales in targeted stores and regions, many brands struggle to execute and measure their trade promotion strategies. As a result, 55% of all trade promotion fail to develop brand recognition in any meaningful way. This blog post will break down the process of planning and implementing a strong trade promotion strategy with airtight execution and measurable results.
Four Types of Trade Promotions
Trade promotions take many forms. They range from the obvious (markdowns when introducing new product lines) to the highly creative (motion sensing cardboard cutouts that sing commercial jingles at passing shoppers). We won’t compile a list here, but instead break down the four main families that distinguish individual approaches.
Modify Pricing Strategy
Merchandisers can change the price per unit in a few ways:
- Temporary Price Reductions (Sales)
- Buy One Get One
- Coupons and Rebates
This strategy succeeds by directly comparing before and after pricing. This doubles by conveying value and lowering the barrier to entry, giving the competitive edge to brands in tight markets.
Push sellers to push you. Offering prizes for high sales numbers adds another directionality to your marketing campaigns. This happens on either the micro or macro levels. Position individual sellers to compete internally or pit entire sales teams in contest on a region-wide (or larger) playing field.
Compelling floor displays, product premiums (bonus gifts or pack-ins), shelf talkers and posters all work to communicate explicit ideas which expand buyer demographics. The physicality of these promotions allow for unrivaled creativity.
Demonstrations and free samples give your reps a literal foothold into retail. Ensure the customers understand your product exactly as you intend by telling them yourself! Break new product lines into market through samples. Showcase new features on updated models with product demonstrations. Create a show, an experience, that wows.
The 3 Keys to Trade Promotion Success
While every promotion and brand is different, highly successful campaigns have a few things in common. Whether you’re executing a TPR or coordinating coupons with endcaps, push these three factors to the limit:
Interrupt the Shopper Experience
Promotions inherently flip shoppers who had no prior intention to buy. Win their attention with something that surprises: an atypical display stand or alluring product premium.
Operate under the assumption that buyers want you, they just don’t know it yet. By inserting your name into buyers’ conscience, you establish yourself as a viable purchase in their shopping canon -- the goal of all trade promotions. This works especially well with impulse grabs and other register items.
Win Retailer Love
All merchandisers should understand their market share: their real estate in shelves and on floors. Stripping market share from competition is key to dominating a location. Retailers will trust your strategies so long as they’re backed with well recorded data. A strong retailer relationship does more than grant strategic flexibility. Friendly retailers often send employees to keep you displays looking good. Even positive relationships with individual salesmen yield long term benefits.
Create unofficial brand ambassadors on the floor by winning the support of staff. Employees push brands they genuinely like. Make sure you are on that list.
Change Product Narrative
Goods sell on story. Every pitch is a well-crafted narrative on product use. Cheerios markets themselves as heart-healthy, claiming they lower consumers’ cholesterol. This distinguishes them from other similar cereals. Narratives create markets. Promotions must tell a story.
Flash posters of your product being used in a new light. Package in gifted premiums that encourage certain environments. Coors just finished a campaign packaging their 36 packs in a travel cooler, begging to be used in outdoor settings. Change your narrative to change your market.
Display Breakdown: Stella Artois
Let’s take a close look at one of the holiday season’s most successful campaigns, from legendary beer maker Stella Artois.
Stella smartly taps into the warm, familiar Christmas imagery by depicting a cozy house, equipped with a colorsynced pallet, brick facing, wreaths, pines, bows, and a mailbox. This associates Stella with fond seasonal memories and values.
This display is huge, but uses its space effectively. The portion allocated to decorations is far smaller than the display initially suggests. By incorporating Stella’s standard color pallet into the display, an otherwise-unimpressive stack of boxes suddenly expands the total scope in a way that feels completely natural.
It’s cheaper to use what you already have, instead of constructing and designing even more cardboard or adding additional trees. Most importantly, the product is easily grabable. It taps into impulse purchases.
Stella Artois is effectively slapping their branding everywhere, but in a way that seems natural and unintrusive, far less annoying than a poster with their logo pasted fifty times. Further, it highlights three distinct product offerings by physically presenting the different unit sizes while incorporating posters with pricing in clear view.
While there’s more to discuss, this display proves -- above all -- there is an undeniable art to promotions that can only be honed through trial and error.
2 Popular Metrics, and 1 You’re Probably Missing
Accurately tracking trade promotion success is notoriously difficult. Every merchandising team has their own preferred KPIs (key performance indicators), but there’s one metric most teams forget.
The two most popular metrics are incremental revenue and marginal return on investment. Incremental revenue tracks how sales performed when compared with an expected baseline. Marginal return is a standard ROI calculation that uses incremental revenue to calculate the growth rate of a promotion. This is especially helpful at determining promotional value added with every further dollar invested.
Execution Tracking: The Secret Metric for Accurate Analysis
Numbers alone cannot guide promotional strategy. An ROI calculation with accurate sales data will always produce a genuine ROI, but context is everything. Get this, only 40% of displays are executed by retailers according to agreed promotional strategy. Maybe your floor display is hiding in the back of store. Maybe your posters are obstructed. In all likelihood, something isn’t right. Noncompliance with promotional strategy is a costly mistake. Worse, it skews POS data. Do poor returns indicate bad strategy or a failure on retailers to properly execute? The answer is found through execution tracking.
Execution tracking tasks field teams with recording observational data on every aspect of the promotional space. The “hows” of execution tracking often vary from team to team, but good execution tracking answers targeted questions on promotional health. Just as trade promotions need clear goals to succeed, arm field teams with focused inquiries to contextualize your POS numbers.
How to Leverage Data for Smarter Execution in the Field
For most brands, the success of any campaign comes down to how well it is launched, maintained, and measured by their team in the field.
Ultimately, engaging with data from past campaigns in a cycle of continuous improvement gives teams the best chance to eliminate execution errors and ensure maximum sales lift over the duration of their promotion. Here, we’ll break down the three stages of the cycle of continuous improvement: Insights, Planning, and Action.
Every action in the field starts because of some Insight. An Insight is simply an indication from past promotional data that there is a problem or opportunity in the field that you can address to have an impact on sales.
From there, brands enter the Planning stage -- analyzing past field performance to decide when, where and with whom you will address that opportunity, and exactly what steps they should take in the store to deliver the highest impact.
Once you’ve deployed your team, we’ve entered the Action stage. Your reps execute your plan in their targeted accounts, and report back data about the in-store conditions they encountered and were able to affect. The data those activities generate feed back into your data set, and inform the next set of Insights that kick the process off again.
This cyclical process drives peak performance because it allows field teams to constantly improve. Every action they take in the field is informed by real-time data, both about current store conditions and the results past campaigns have had on sales. The cycle of continuous improvement empowers teams to take the right action in the right store at the right time, maximizing both their efficiency and the impact they have on sales.
Melissa is a recent graduate of Northeastern University and a content marketing specialist at Repsly, Inc. She is committed to applying her skills in order to bring value to Repsly readers and customers. Outside of work, Melissa enjoys practicing yoga, making music, and anything dog-related.