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RetailWire/May 23, 2007 -- Discussion Questions: What are some ways vendors and retailers are resolving trade promotion allowance issues? Are there methods to assure proof of performance that are practical for retailers? Do you agree that manufacturer salespeople need to know more about media buying?


 
RetailWire BrainTrust Response:

David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates

Al Heller's report on trade allowances is outstanding and offers a very truthful and frank perspective and goes where many trade journal writers would not dare. However, this is exactly the type of dialog that needs to happen for everyone's true benefit--the manufacturer, the consumer, and also...and maybe most of all--the retailer. In an effort to be fair and balanced, here is the very short version of how I advise my own manufacturer-clients and employers to look at trade allowances and support:


1. Recognize that trade advertising and other programs that retailers "sell" does have significant value to the brand for lots of reasons--too many to list right here.

2. Know and be completely educated that some types of products in certain categories respond to retail ads better than others, while other retailer programs, besides ads, work more effectively for others. Know what truly drives your product or brand and make recommendations accordingly to your retail partners.

3. Recognize that in some instances retailers make more profits from "selling" programs than they make from "selling" products off the shelves. This is not meant to be judgmental as much as in many instances, it's reality. As manufacturers, we need to consider and deal with it, as necessary.


4. Refrain from making black and white policies about your trade advertising strategies. Instead, make excellent judgments on a case by case basis.


5. Do not patronize programs that have no clear objectives to drive more business for the retailer and your brand. To do so will hurt your brand and other retailers that compete with a greater or more conscientious degree of ethics and purpose.


6. Try to sit down with the retailer once or twice each year to have a comprehensive dialog and planning session with the goal in mind of building each other's mutual business in a dynamic manner so that all the planning, spending and commitments made are dynamic, interactive, and purposeful to achieve ultimate objectives and goals. Contrarily, the piecemeal approach is usually not impactful or effective.


7. Look at your projected or predicted ROI, not from one event to the next but comprehensively over a period of one, three, and five years.


Everyone should also keep in mind that expectations should differ between what retailers expect from different types of brands and products. Every day name brands should bear the majority of trade funding because the name recognition and feature prices are what drives traffic, and these brands are unique to no retailer, so price is what drives traffic. However, niche brands and specialties should be promoted uniquely and creatively, with points of differences offered even in the promotions, and in most cases, private label and store brands should be promoted at the expense of the retailer, not the manufacturer.


 


David Biernbaum
David Biernbaum & Associates
36 Four Seasons Center, Suite 101
Chesterfield, MO 63017
Ph: (314) 434-6008

Master Broker Sales; Consultant; 
CPG Business Development

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