For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Channel Marketing and Trade Promotion

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin What is trade promotion and how does it fit into channel marketing? How do trade promotions strategies and practices operate? What is co-marketing and why is it an integrating practice? Chapter Outline

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Channel marketing is more critical now than ever because of a major power shift from: Chapter Perspective Manufacturers Retailers

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Opening Case: Finish Line

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin A trade-promotion partnership including: Use of a Nike-recommended agency Joint Finish Line/Nike in-store fixtures/POP displays Joint advertising on TV and in magazines Nike Stories in Finish Line Magazine A trade-promotion partnership including: Use of a Nike-recommended agency Joint Finish Line/Nike in-store fixtures/POP displays Joint advertising on TV and in magazines Nike Stories in Finish Line Magazine Position Finish Line as the Nike destination A trade-promotion partnership including: Use of a Nike-recommended agency Joint Finish Line/Nike in-store fixtures/POP displays Joint advertising on TV and in magazines Nike Stories in Finish Line Magazine A trade-promotion partnership including: Use of a Nike-recommended agency Joint Finish Line/Nike in-store fixtures/POP displays Joint advertising on TV and in magazines Nike Stories in Finish Line Magazine Position Finish Line as the Nike destination 20% increase in Nike sales at Finish Line Nike destination scores rose from 20% to 62% 20% increase in Nike sales at Finish Line Nike destination scores rose from 20% to 62% Opening Case: Finish Line Challenge: Answer: Results:

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Vs. Traditional concept Trade Promotion Discounts and premiums offered to retailers in exchange for their promotional support Trade Promotion Discounts and premiums offered to retailers in exchange for their promotional support Traditional concept Trade Promotion Discounts and premiums offered to retailers in exchange for their promotional support Trade Promotion Discounts and premiums offered to retailers in exchange for their promotional support What Does What is Trade Promotion? New thinking Channel marketing An integrated process that uses personal selling, trade promotions, and co-marketing programs to build relationships with retailers and other channel members Channel marketing An integrated process that uses personal selling, trade promotions, and co-marketing programs to build relationships with retailers and other channel members

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Common Channel Members Wholesalers: Companies that move goods from manufacturers to retailers Bottlers: In the soft drink industry, local companies who buy ingredients then mix it, bottle it, and sell it to local stores Dealers: In the automotive industry, they buy cars from the manufacturer, and display models on their lots/showrooms Retailers: The stores that sell products and services to consumers

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Think About It When a discount store like Target features Tide in its ads, does it make the brand seem cheap? How about Wal-Mart?

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Sampling the Product Stimulate Consumer Demand Special Offers Research Consumer Needs Shelf- management Diagram Profit Projections Slotting Allowances Shelf- management Diagram Profit Projections Research Consumer Needs Sampling the Product Special Offers Stimulate Consumer Demand Selling New Products Selling

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin The trend is toward more trade support of existing products at the expense of consumer promotion Promoting Authorized Products Percent of Marketing Budget Consumer promotions2415 Trade promotions5361

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Control Inventory Levels Respond to Competitive Programs Increase Distribution Balance Demand Promotional Support by Channel Members Respond to Competitive Programs Control Inventory Levels Balance Demand Increase Distribution Trade Promotion Objectives Objectives

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin In-store Support For the Cheese Industry + +

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Counter New Competitive Introductions Complement Consumer Promotions Motivate Trade Support With Allowances Complement Consumer Promotions Trade Promotion Strategies Strategies

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Dealer Contests Dealer Loader Volume Discounts Allowances Sales Training Point of Purchase (PoP) Sales Training Dealer Loader Dealer Contests Allowances Volume Discounts Trade Promotion Tools Tools

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin A Special Advertising Allowance For Running this Ad + +

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Insight: Trade Promotion Agencies Developing and managing trade promotion programs requires a unique combination of brand marketing and retail understanding. Most advertising agencies and general marketing communications agencies do not have the channel understanding. However, there are a handful of agencies that specialize in trade promotion, and due to the demand, more agencies are starting to offer their clients trade promotion services at some level.

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin An Example of Dealer Loader Rack

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Tales From the Real World Sometimes in the real world, good channel marketing comes down to sharing some simple information and advice. For example, Oscar Mayer helped encourage the adoption of its new Breakfast Ham product by working closely with retailers to make sure that it was displayed next to bacon and sausage (in the breakfast meats section) rather than with traditional ham products (in the refrigerated meats section).

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin An Example of POP Clutter

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin IMC In Action: Kendall-Jackson + +

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Creation of a channel marketing team that: Helped train staff at Red Lobster, Olive Garden and Hyatt Hotels Advertised in trade journals to build relationships with retailers Worked with retailers to increase aisle space Created a cross promotion with Hormel promoting wine and meat Creation of a channel marketing team that: Helped train staff at Red Lobster, Olive Garden and Hyatt Hotels Advertised in trade journals to build relationships with retailers Worked with retailers to increase aisle space Created a cross promotion with Hormel promoting wine and meat To increase sales without huge ad expenses Sales volume increased 24% versus 2% for the industry IMC In Action: Kendall-Jackson Challenge: Answer: Results: Creation of a channel marketing team that: Helped train staff at Red Lobster, Olive Garden, and Hyatt Hotels Advertised in trade journals to build relationships with retailers Worked with retailers to increase aisle space Created a cross promotion with Hormel promoting wine and meat Creation of a channel marketing team that: Helped train staff at Red Lobster, Olive Garden, and Hyatt Hotels Advertised in trade journals to build relationships with retailers Worked with retailers to increase aisle space Created a cross promotion with Hormel promoting wine and meat To increase sales without huge ad expenses

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin What is Co-Marketing? Co-marketing: A customized manufacturer- retailer joint effort designed to have a better price/image balance in local retail advertising of manufacturers brands Increasingly important for brands because: Competition for shelf space is intense Need to accommodate the growing power of retailers 5 chains control 50% of all U.S. grocery sales

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Build Traffic Maintain Brand Consistency Encourage Integration Maintain Brand Consistency Build Traffic Three Co-Marketing Objectives Objectives

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin IMC In Action: P&G

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Development of Organization 2005 that: Conducted research to better understand consumer needs Shifted money from coupons to channel marketing efforts Allocated $100 million annually for retailer-specific trade promotions Development of Organization 2005 that: Conducted research to better understand consumer needs Shifted money from coupons to channel marketing efforts Allocated $100 million annually for retailer-specific trade promotions To be smarter about promoting its brands P & G is now a leader in its co-marketing efforts with major retailers including Wal-Mart IMC In Action: P&G Challenge: Answer: Results: Development of Organization 2005 that: Conducted research to better understand consumer needs Shifted money from coupons to channel marketing efforts Allocated $100 million annually for retailer-specific trade promotions Development of Organization 2005 that: Conducted research to better understand consumer needs Shifted money from coupons to channel marketing efforts Allocated $100 million annually for retailer-specific trade promotions

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Final Note: Push and pull strategies are both important to get retailers to sell brands Here is an analogy: We cant hire you until you have experience Employers to college grads: We cant carry your product until our customers ask for it Retailers to brands: