Trade Marketing Intro Kyiv April 17 th 2014

Trade Marketing Intro Kyiv, April 17 th, 2014 Eugenia Kotikova Sun In. Bev Ukraine 1

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

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Shopper vs. consumer 4

Shopper vs. consumer 5

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

Shopper vs. consumer: best practice AXE 8

From supplier to shopper Marketing is impacting consumer by building strong brand n -Co mo -Pro bility i sing -Vis chandi r -Me alty -Loy ts trac nts ou Disc - Supplier Distributor Retailer Shopper Consumer ng rtisi dve l -A ita mo -Dig nd pro -Bra Trade Marketing is stimulating sales by impacting retailer, shopper and distributor in line with brand strategy 9

Trade marketing and marketing mix ATL 10 BTL

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

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: - 12 Merchandising Trade promotion Product visibility Marketing communications in-store 70% of s decis ions a hopping re in-sto re. Th now made is new leads tre to the great nd impor er merch tance of andisi shopp ng an er pro motion d consu s tha mer d irected n progra ms.

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. Supplier Distributor Цель торгового маркетинга, обращенная к посреднику - управление продажами нашего товара непосредственно у посредника. 13 Retailer Цель торгового маркетинга, обращенного к продавцу замотивировать безразличногонейтрального к товару Shopper Цель торгового маркетинга, обращенная к покупателю - стимулировать желание покупателей выбрать конкретный товар, торговую марку. Consumer Цель торгового маркетинга, обращенная к потребителю – увеличение лояльности, рост числа постоянных покупателей.

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 14

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 15

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) 16

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

Trade marketing tools Trade equipment Trade promotion POSM* Trade programs *POSM = Point of Sale materials 18 TM tools Merchandising

Trade marketing tools: TM programs (ABI) In AB Inbev there are three sales channels that are being managed in different ways (different tools and programs). Traditional trade (OFF-trade) Gastronoms Pavillions Kiosks Self-service stores Petrol stations Modern Trade (Key Accounts) Supermarkets Hypermarkets Cash and Carry Neighborhood stores ON-trade (Ho. Re. Ca) Bars Restaurants Pubs Night clubs Cafes Main trade program that is being performed in all of the channels = commercial agreements • • 19 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

Trade marketing tools: POSM 20

Trade marketing tools: POSM 21

Trade marketing tools: POSM 22

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. 2 ndary place Flag Stopper Display for cashier zone Sticker Double pricetag Pricetag Sticker tape 23 Poster Topper

Extra visibility 2 ndary place Shelf Trade marketing tools: POSM split by types 24

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

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

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

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

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

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

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% 31

Trade marketing tools: other trade equipment • • • 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 32 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

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

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

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

Trade marketing tools: consumer promotion Pack promo • • 36 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

Trade marketing tools: consumer promotion Gift mechanics • • 37 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

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

Trade marketing tools: customer promotion AB In. Bev loyalty program + План продаж Дополнительное ХШ в лучшем месте место продаж* 50% полочного пространства Выполнение плана на 9099, 9% X% ретро-бонуса от стоимости проданной ТТ продукции компании** 39 Выполнение плана на 100% и выше X% ретро-бонуса от стоимости проданной ТТ продукции компании**

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

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

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) 42

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. 43

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 44

Trade marketing tools: cross-merchandising 45

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 instore 46

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