No brand is immune from competition. To stay afloat, consumer packaged goods (CPG) brands and wholesale distributors need to view their relationship with retailers as a strategic partnership, trade promos, and employ specific marketing tactics.
One way a B2B business can expand its clientele is to implement marketing strategies for wholesale distributors, foster client loyalty, and boost revenues by promoting trade promotions, which allows both retailers and wholesale distributors or brands to experience success on the shelf.
This article simplifies trade sales promotions, traditional sales promotions and introduces readers to various examples and their advantages. So what are trade promotions? Let’s find out.
What are Trade Promotions?
Trade promotions management is a marketing strategy B2B wholesalers and CPG product brands use to attract more customers. For example, a cosmetics company selling B2B skincare products to distributors, supermarkets, retail stores and beauty salons. They make use of special pricing to generate demand for certain items by making them more attractive to potential retail buyers (including restaurants, convenience stores, bodegas, hotels, cafes, etc.) and to boost sales in the distribution channels.
Managing trade promotions and setting trade promotion strategies best practices are an important piece to a successful relationship between the wholesale distributor and CPG brand and require both to carry out.
This promotional strategy is useful when:
- Introducing new products (i.e new food or beverage / health or beauty products) or
- Seeking to increase awareness about innovative product features (i.e nail polish that changes color in the sun or health drink that includes a unique fruit)
All of which incentivizes resellers to buy more of the product and increase the product’s accessibility to the final customer.
Trade Promotion Effectiveness
Measuring trade promotion effectiveness is a critical aspect of evaluating the impact of trade marketing activities on sales and profits. Here are some common metrics used to measure trade promotion effectiveness:
- Sales lift: Sales lift is a common metric used to measure the impact of a trade promotion on sales. It is the percentage increase in sales during the promotion period compared to the non-promotion period. This metric is a good indicator of whether a trade promotion has been successful or not.
- ROI: Return on investment (ROI) is a financial metric that measures the profitability of a trade promotion. It is calculated by dividing the net profit from the promotion by the cost of the promotion. A positive ROI indicates that the promotion was profitable, while a negative ROI indicates that the promotion was not profitable.
- Incremental volume: Incremental volume is the additional volume of products sold during the promotion period compared to the non-promotion period. This metric can be used to measure the effectiveness of a promotion in driving sales.
- Market share: Market share is the percentage of total sales in a market that a company or brand has. Measuring changes in market share during a promotion can provide insights into the effectiveness of the promotion in attracting customers and gaining market share.
- Customer behavior: Measuring customer behavior during a promotion can provide insights into the effectiveness of the promotion in driving customer engagement and loyalty. For example, tracking the number of new customers acquired during a promotion can help measure the effectiveness of the promotion in attracting new customers.
- Distribution gains: Measuring distribution gains during a promotion can help evaluate the impact of the promotion on the availability of the product in stores. This can help identify opportunities to improve distribution and ensure that the product is available in the right locations.
In summary, measuring trade promotion effectiveness requires a combination of financial and non-financial metrics to provide a comprehensive view of the impact of a trade promotion on sales and profits. This information can be used to improve future trade marketing activities and increase the effectiveness of promotions in the future.
Retail promotion solutions refer to the various marketing techniques and strategies used by businesses to increase sales and drive traffic to their stores. This includes sales promotion techniques such as discounts, coupons, and product giveaways, as well as more traditional marketing methods like personal selling and direct marketing. Additionally, retailers can leverage video editor and online marketing tools to create engaging content that subtly promotes their products or services without appearing overtly promotional. Using video animation to showcase product benefits, seasonal offers, or in-store experiences can further enhance visual appeal and capture buyers’ attention across digital channels.
Business promotion refers to the process of creating awareness and generating interest in a product or service. The promotion marketing definition includes all types of advertising and sales promotion techniques used by businesses to promote their products and services to potential customers. With the rise of omnichannel trade promotions, businesses must utilize a mix of both online and offline channels to reach their target audience effectively. By defining their business promotion goals and employing effective sales promotion techniques, businesses can increase their brand awareness, boost sales, and establish themselves as a market leader in their industry.
What Is Trade Spend?
Trade spending is a common practice in the consumer-packaged goods (CPG) and retail companies. Trade spending is the amount a company spends to increase demand for its products, including coupons, preferred shelf display locations (slotting), and advertising, to name a few.
What is the difference between Trade Promotion vs Consumer Promotion?
A trade promotion strategy is when you market your products to your business partners so that they buy more products at a wholesale price to sell in their stores at a retail price. Effectively, trade promotion is business to business (B2B) marketing, while consumer promotion is business to consumer (B2C).
5 Types of B2B Trade Promotions with Examples
In-store Displays
The first step in making a sale is grabbing the customer’s attention, and cleverly designed in-store displays achieve just that. It’s all about drawing attention to the product inside the store to encourage impulse buying.
In fact, research shows that 16% of impulse purchases were made in response to in-store displays, like:
- Floor stickers
- Posters
- Banners
- Life-size display stands
- In-person product demonstrations
- Promotional fixtures
Each one strategically placed in retail stores that aim to catch customers’ attention and make products stand out. See example picture below:
Deals and Discounts
The main influencing factor in purchasing decisions is price, with 89% of customers naming this variable as determinant in their purchases (source) . Manufacturers and wholesalers apply sales and discounts to encourage repeat business from current retail customers and to draw in new ones.
Trade Promotion Campaigns, Deals and discounts can take many different forms, such as:
- Price cut
- Percentage off
- Tiers of discounts (the more you buy, the more you save)
- Unique deals (buy X, get Y at a lower price/percent discount/free, etc.)
It’s noteworthy to mention that the mobile sales app a wholesale distributor or CPG brand uses should feature custom promotions during the order taking process based on retail customer and good reporting to measure success and to track and gain insightful metrics on a trade promotion effectiveness.
Let’s check out an example of a deal:
Bundles
Sales Contests
People love winning prizes, which is why sales contests are such a great incentive for retailers. Contests create friendly competition and gets people interested in winning. Usually, the goal of sales contests is to encourage retailers to sell more of a specific product in their stores. In return, the retailer that sells the most is compensated with a monetary bonus or exciting gift. Possible prize ideas include, money, vacation trips, products, or other managed trade promotions services.
Read a great article about the success of S. Abraham & Sons (SAS) Inc. who reportedly grew candy sales by more than 30%, with contests and promotions. They pushed certain candies during #nationalcandymonth in June. See the example below:
Rebates
In contrast to discounts or coupons, which are deducted at the time of purchase, rebates are provided after payment. According to Incentive Insights rebates make consumers 75.4% more likely to make a purchase. Making rebates a successful promotional strategy because they appeal to both impulsive and cautious buyers. The only thing is, people will buy a product, love the thought of saving, even if they never cash the rebate.
As a result, rebates offer retailers the benefit of giving customers a temporary discount on a product, to stimulate sales, while allowing it to maintain its current price point. CPG brands benefit because of a demand increase, but since not everyone cashes the rebates, there is no significant impact on profit margin. Making it a win-win for everyone (as long as you cash your rebate).
See the example below of a rebate offer:
What are the Benefits of Trade Promotions?
Trade sales promotions and online sales promotions can benefit B2B consumer goods companies in a variety of ways. Here are some reasons a company might offer a trade sales promotion method to the consumer goods industry:
Increased Order Size
Faster Order-to-Cash Cycle
Increased Profitability
Improved Customer Loyalty Programs and Nurturing Relationships
Trade promotions are a great way to build and maintain loyal B2B relationships between wholesale distributors, CPG brands and retailers. Providing indoor displays ,discounts, rebates and bundles to resellers promotes a mutually beneficial relationship for financial gain and growth as partners in the supply chain. Other forms of trade promotions, such as sales contests, can draw new clients and reward existing customers, increasing customer satisfaction and keeping loyal customers.
Frequently Asked Questions
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What are trade promotions in retail and distribution?
Trade promotions are marketing strategies used by manufacturers and brands to increase product sales through retailers, wholesalers, or distributors using discounts, incentives, displays, or special offers.
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Why are trade promotions important for CPG companies?
Trade promotions help CPG companies improve product visibility, increase sales volume, strengthen retailer relationships, and gain competitive advantages in crowded retail markets.
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What are common examples of trade promotions?
Common trade promotion examples include temporary price reductions, buy-one-get-one offers (BOGO), in-store displays, cooperative advertising, retailer incentives, and volume discounts.
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How do businesses measure trade promotion effectiveness?
Businesses measure trade promotion success using metrics such as sales growth, return on investment (ROI), inventory turnover, customer demand, and retailer performance during promotional periods.
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What is trade promotion management software?
Trade promotion management (TPM) software helps businesses plan, track, analyze, and optimize promotional campaigns while improving budgeting, forecasting, and retail execution performance.
Final Thoughts
Trade promotions are a key part of any brand-retailer and wholesaler-retailer relationship. By keeping an eye out for mutually beneficial trade promotion techniques and ideas, it’s possible to strengthen your B2B partnerships, enhance your brand and increase sales. Keep these trade promotion examples in mind when building your next sales strategy and watch products fly off the shelves. Schedule a Call for a trade promotion optimization session to talk to one of our experts to learn more about how a trade promotion management software can help you.
