11 Trade Marketing Intro Kyiv, April 17 th

11 Trade Marketing Intro Kyiv, April 17 th , 2014 Eugenia Kotikova Sun In. Bev Ukraine

2 “ Marketing is too important to be left just to the marketing department. ” — David Packard, founder of HP

4 Shopper vs. consumer

5 Shopper vs. consumer

7 Shopper vs. consumer Consumer Need: tastes as good as the barista’s brew. Consumer Need : Craving a Big Mac Shopper Need : Conveniently open when you need us

8 Shopper vs. consumer: best practice AX

9 From supplier to shopper Marketing is impacting consumer by building strong brand Trade Marketing is stimulating sales by impacting retailer, shopper and distributor in line with brand strategy-Contracts -Discounts -Promo -Visibility -Merchandising -Loyalty -Advertising -Digital -Brand promo

10 Trade marketing and marketing mix. ATL BTL

11 ATL and BTL THE LINEAwareness or Attention focused marketing Interest + desire focused marketing • Sales promotion • Direct marketing • Personal selling • Public relations • TV • Radio • Outdoor • Newspapers • Magazines

12 Trade marketing: definition • Trade Marketing is sales promotion activity aimed to increase demand of wholesalers, retailers and shoppers rather than end consumers. • Trade Marketing implies promotion via specific instruments: — Merchandising — Trade promotion — Product visibility — Marketing communications in-store 70% of shopping decisions are now made in-store. This new trend leads to the greater importance of merchandising and shopper promotions than consumer directed programs.

13 Trade marketing targets: by target audiences Глобальную цель торгового маркетинга можно сформулировать так: увеличение числа покупателей, увеличить количество товара, купленного одним и тем же покупателем. Цель торгового маркетинга , обращенная к покупателю — стимулировать желание покупателей выбрать конкретный товар, торговую марку. Цель торгового маркетинга, обращеннаяк потребителю – увеличение лояльности, рост числа постоянных покупателей. Цель торгового маркетинга, обращенного к продавцу — замотивировать безразличного-н ейтрального к товару. Цель торгового маркетинга , обращенная к посреднику — управление продажами нашего товара непосредственн о у посредника.

14 Trade marketing targets: AB In. Bev approach • Market Share • Sales volumes • Volume coverage • Distribution • Market Share • Brand health • Brand awareness • Likeability • Market Share • Sales volumes • Brand visibility and availability • Promo efficiency Full alignment between brand strategy and sales targets

15 Trade marketing tasks: YES — Stimulate trial — Stimulate switching from competitors’ brands — Stimulate re-purchase — Increase basket size — Stimulate stock habit — Increase purchase frequency — Impact brand awareness — Impact loyalty to brand — Block competitors’ actions

16 Trade marketing tasks: NO — Change negative attitude to brand — Solve problems with low product quality — Using ONLY TM tools to promote product without communication in other channels (TV, digital, outdoor)

17 Trade marketing department in company structure Trade Marketing. Sales. Variant 1 Variant 2 Marketing. Sales Trade Marketing Variant 3 Sales Marketing. Trade Marketing

18 Trade marketing tools *POSM = Point of Sale materials

19 Trade marketing tools: TM programs (ABI) Traditional trade (OFF-trade) Modern Trade (Key Accounts) ON-trade (Ho. Re. Ca) Gastronoms Pavillions Kiosks Self-service stores Petrol stations Supermarkets Hypermarkets Cash and Carry Neighborhood stores Bars Restaurants Pubs Night clubs Cafes In AB Inbev there are three sales channels that are being managed in different ways (different tools and programs). Main trade program that is being performed in all of the channels = commercial agreements • We fix commercial drivers and availability terms: — Assortment — Commercial drivers (shelf share, equipment share) — Promotional plan — Other conditions • For compliance to these conditions mentioned above ABI pays contract value

20 Trade marketing tools: POSM

21 Trade marketing tools: POSM

22 Trade marketing tools: POSM

23 Trade marketing tools: POSM Point of Sale (POS) materials are used for executing advertising campaigns, exhibitions and presentations. As an effective marketing tool, well thought out and properly presented POS materials attract consumer attention and promote the brand. Sticker Pricetag Double pricetag. Flag Sticker tape Display for cashier zone Topper Stopper 2 ndary place Poster

24 Trade marketing tools: POSM split by types. S h elf 2 n dary p lace Extra visib ility

25 Trade marketing tools: POSM ‘ugly truth’ Several researches state that shoppers notice less than 30% of POCM!

26 Trade marketing tools: POSM ‘ugly truth’ Good or bad?

27 Trade marketing tools: POSM ‘ugly truth’ Good or bad?

28 Trade marketing tools: POSM ‘ugly truth’ Good or bad?

29 Trade marketing tools: other types of visibility • Inside and outside POS branding that impacts brand visibility and increases quantity of POS with dominance

30 Trade marketing tools: trade equipment (ABI) Trade equipment Coolers Tents Other equipment Draught equipment

31 Trade marketing tools: other trade equipment • Проект молочных производителей по увеличению потребления молочных продуктов – « 3 молочных продукта в день» • Производитель упаковки наносит логотип на свою навигацию и оборудование Цель: • Увеличить видимость проекта для потребителя • Увеличить потребление на душу населения –увеличить продажи молочной категории • Рост продаж из категории на тестовый период не менее +10%

32 Trade marketing tools: other trade equipment • Non-standard wine layout and special equipment to provide it • As wine is premium product that is associated with special consumption ritual and culture it has to be highlighted in a premium way in POC • As beer also has special ritual and specific consumption culture that is being underdeveloped – in terms of category management initiative we reshape standard equipment into premium one Amstor, Donetsk

33 Trade marketing tools: other trade equipment • Pit Stop Brazil Works from the beer range and convenient to shop brand DRIVERS • Shop in Shop Ukraine : wide assortment and non-standard visibility to attract more shoppers and increase sales volumes

34 Trade marketing tools: trade promotion Trade promotion Impacting shopper / consumer Impacting customer — to stimulate shopper buy more -> take-off (sales volume) increase -> MS impact — To increase loyalty from consumer’s side — to stimulate retailer stock more -> secondary sales increase — Pricing activations (price reduction, discount) — Pack promo (multipack, giftpack, upsize pack) — Couponing — Gift mechanics — As part of loyalty programs — Bonuses — Expired goods return (special conditions) — Gift mechanics if increased order — ‘ Mystery’ shopper

35 Trade marketing tools: consumer promotion Pricing activations • Short-term activations usually to push sales of definite SKU • Most effective for categories with price elastic consumers

36 Trade marketing tools: consumer promotion Pack promo • Promo packs can be sold as a regular SKU (upsize pack = 1. 2 l for the price of 1 l) • Usually require involvement of supply (not only TM) because of the difficulties with package itself

37 Trade marketing tools: consumer promotion Gift mechanics • Gift mechanics are various – starting with immediate gift taken from the shelf or stuck to the package ending with promoters giving the gifts • Some promo imply not only buying definite SKU but doing something in order to get the gift

38 Trade marketing tools: consumer promotion As part of loyalty programs

39 Trade marketing tools: customer promotion П лан продаж X % ретро-бонуса от стоимости проданной ТТ продукции компании** X % ретро-бонуса от стоимости проданной ТТ продукции компании**+ ХШ в лучшем месте Дополнительное место продаж* Выполнение плана на 90 -99, 9% Выполнение плана на 100% и выше 50% полочного пространства. AB In. Bev loyalty program

40 Trade marketing tools: trade promo 2 in 1 For consumer For customer

41 Trade marketing tools: ‘the ugly truth’ about trade promo

42 Trade marketing tools: trade promo KPIs — POC coverage (# of POCs covered with activation) — Volume coverage (volume in POCs covered with activation) — Volume uplift from activation (extra sales volume sold in POCs with activations vs. POCs without activation) — Value uplift (MACO) from activation (extra money earned from activation) — Hitting target in promo budget — # of contacts involved (effective \ total) — Cost per contacts (total budget to # of contacts) — ROI = return on investment (if value uplift paid back total investment on promo)

43 Trade marketing tools: merchandising At a retail in-store level, merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase.

44 Trade marketing tools: merchandising (AB In. Bev) Principles of layout = planogram that is being developed by each of the producers. Planograms can be differentiated by: — Pack type — Taste or type — Priority of placement based on sales

45 Trade marketing tools: cross-merchandising

46 Summary • Trade Marketing is a separate sphere of activity aimed to stimulate demand increase sales • Trade Marketing is targeting shopper, retailer and distributor rather than end consumer • Trade Marketing is disposing variety of tools: — Trade promotions — Trade programs — POCM — Trade equipment — Merchandising Each of them has own unique impact on demand shopper in-store

47 … and finally Trade Marketing is VERY interesting. Welcome to the dynamic and challenging trade marketing world