The ten steps to successful trade marketing planning*

20 de Dezembro de 2012

Categoria: Inglês

A guide to success in your “budgeting” for the coming year

Between August and November, the trade marketing office of Brazilian consumer-goods industries generally go through the planning period for the following year’s budget. The objective of this process is to have some prevision over the expenses, investments and potential return on the business. The final document of this process is a business plan, by brand, category and sales channel, that integrates into the marketing, logistics, production and financial plan that companies submit to their shareholders in Brazil and abroad.

This article is particularly directed to all those trade marketing managers who at this moment are pouring their efforts into mounting the business plan that will enter into next year’s budget. It is also a recipe for being happy all-year long in trade marketing – a method of planning and working that will allow trade to use just the best ideas in the trade marketing plan. Apart from this, it will facilitate the relationship of this area, with all the rest, by showing how to say “No”, without feeling guilty, to any proposal that does not integrate, reinforce or mobilize the strategic incentives of your company’s brands within the trade marketing plan for the coming year.

During the budget period, apart from very few hours sleep and all the stress among senior trade marketing managers, it is common to see these professionals accumulating the difficult task of disputing funding for its area with that of marketing (communication) and with sales (the so-called commercial funding). This requires an intense effort to prove the worth of your own proposals and, for this reason, only the best must be used.

The job of the trade marketing manager is really exhausting, as he/she must integrate into his/her proposals those from other areas, previously aligning his/her actions with the launches of new products, and actions from brand and product managers, dosing his/her actions in accordance with the capacity of sales, and implementing them in each of the channels

The absence of this type of pre-alignment creates situations in which the salespeople cannot manage to implement a large number of promotions, competitions and initiatives alongside the direct and indirect channels of distribution. This happens simply because the number of actions, when all added up, make the flow of the commercial relationship impractical. I have heard of cases of companies where a salesperson has had eleven actions in five different categories to present to his interlocutor in a large foodstuff distributor – something really non-viable.

We would like to make a contribution for trade marketing managers by presenting the 10 steps to a very successful trade marketing plan. A learning tool that integrates finance to the process of trade planning is also available (please request by email at the file containing the learning tool in Excel).

The 10 steps to trade marketing planning:
– 1st step – Context research study;
– 2nd step – Inventory of opportunities (Gaps);
– 3rd step – Quantify the Gaps;
– 4th step – Analysis of the increases from actions;
– 5th step – Analysis of operational viability and prioritization;
– 6th step – Tactical plan;
– 7th step – Action ranking;
– 8th step – Balance of results from actions;
– 9th step – Integrated P&L with all actions;
– 10th step – Risk analysis.
See the macro-model below:


Step 1 – Context research study
The items that the study comprises are:
• General strategy of the company;
• Market;
• Competition;
• Key accounts;
• Shopping and consumer behavior;
• Marketing plan and corporate targets;
• Social, economical, cultural and technological context.

Step 2 – Inventory of Opportunities
Group together all the ideas and good practices sent by Sales, Trade, and Trade and Shopper marketing agencies. As yet, there is no managerial evaluation of the actions, they are just grouped by either channel of category of products to which they refer.

There are 3 sources of opportunity that can be included in the annual plan:

• Channel opportunities: part of the analysis of opportunities(Gaps) for leveraging the brand’s presence in sales channels, where the category could be sold;

• Shopper opportunities: seek to increase the shopper conversion of the category toward your brand. In this point, the tools to make this happen are considered, in other words: visibility, extra points, promotions, price strategy, selection, category management, etc.;

• Opportunities of increasing trade marketing efficiency: this is to get more out of the same resources. A constant concern in this type of analysis is the traditional dilemma “do-it-yourself versus outsourcing” as a way of increasing the efficiency of the trade efforts. This point also covers sales incentives, variable remuneration, structure, cargo
description and automated systems.

Step 3 – Quantify the Gaps (or “development points” – to be politically correct)
Try to score the value of the opportunities, quantifying the financial gains from a “macro” vision. In this point, the trade manager must ask him/herself “How much is this opportunity worth?” If there is no numerical answer, in terms of profit margin, market share or sales increase, probably the idea should not be contemplated in the trade marketing plan.
Tip: In my experience, as a trade professional since 1997, the champions for sales increases are: reduction of rupture, followed by an improvement in the efficiency of restockers, salespeople or distributors and sales promotions.

Step 4 – Analysis of the increases from actions
In this step, try to quantify the creation of value (worth) of each action, in other words, the capacity to bring additional profit in a determined period – generally 12 months. To do this, one needs to know the necessary cost or investment in trade to carry out each of the presented proposals. Clearly, one is working with an estimate at this point, and for this, it is important to have agencies that can supply some notion of the costs, before making the proposal in itself. The creation of value – in a quite simplistic formulation – is measured by
equating the resulting profit of the increase in sales for the industry, or brand, and the cost or investment involved in carrying out this action.

Step 5 – Analysis of operational viability and prioritization
The aim is to avoid the trade marketing manager using just his personal opinion to evaluate the actions and, thereby, becoming susceptible to being taken by colleagues as someone who is subject to predilection and whim. It is therefore important to use a set of fixed criteria in both the analysis of viability and in that of prioritization.

The use of four analytical requisites, with weightings defined by the top management of the company, will facilitate the job in hand for trade. Each action will possess a type of scorecard that will help the decision-making of those which will go to the final trade plan or not. The higher the score, the greater the chance of receiving the funding to be allotted in the coming year, for example:

• Criteria 1: Strategic alignment – Weighting 4
• Criteria 2: Ease of implementation – Weighting 2
• Criteria 3: Non-financial impact – Weighting 1
• Criteria 4: Return on investment – Weighting 3

Step 6 – Tactical Plan
The tactical plan is a detailing of the actions that have been previously selected to make up the final plan. An ideal format for the tactical plan has the following well-explained points, either in a document or presentation:

• Context ( What is the problem or opportunity to be addressed?);
• Market (Where will it happen?);
• Aims of the action (What is expected from this?);
• Process metrics (How can the extension from its implementation be evaluated?);
• Results metrics (What is the criteria for success?);
• Region/Channel (Who will be the executor of the sales action?);
• Category/Client (Which products and which clients will be involved?);
• Mechanics (How is it going to work?);
• Financial results (What is the P&L of the action?);
• Non-financial results (Are there any positive collateral impacts?);
• Schedule;
• Risks involved.

It is important to understand that in trade marketing there are some standardized actions that serve all clients and others which must be customized for just one client or channel. This characteristic, however, does not stop the manager from previously creating them, thereby foreseeing emergency situations for the most common of problems, as, for
example, “counter-balancing the increase in the price list” by means of incentive promotions and sell-out (increase in turnover).

Step 7 – Action ranking: “The execution is the only strategy the shopper sees”
Actions with low scores should be excluded from the plan to be presented to the board of directors, and knowing how to calculate the ROI (Return on Investment) on trade marketing will greatly help the manager to prioritize these. Nevertheless, as the capacity of sales to execute many actions in the field is restricted, from the practical point of view, the strategy will only come to realization when the salespeople are capable of executing it together with some client. The brand plan, plans of clients and the capacity of sales executing proposals should be considered. As such, the prioritization is the key to profitable growth of mass consumer-goods companies.
Step 8 – Balance of results from actions
On this point, the manager must formalize the premises in order to calculate the results of each action, including how he/she arrived at the return presented, and the metrics of success of the proposal.

Step 9 – Integrated P&L
The ninth step is a continuation of the eighth. Here, instead of taking each action, one by one, presenting individual results, all the selected actions are added up in terms of their sales increase, costs and increased profit margins. This allows the manager to present an integrated budget proposal (investments and costs) and of the potential increase in sales (which will go toward the commercial target), apart from the potential gains in market share (to be considered in the marketing budget – products).

Step 10 – Risk analysis
Finally, the last step must be to present the points of attention or warning about organizations or factors that could represent a risk to the plan. Among the most often heard justifications in trade marketing for the failure of good proposals are the following:

• Reaction from the competition;
• Substitute products and new entrances;
• Changes in the market and in consumer spending;
• Internal factors and cultural organization;
• Bad suppliers;
• Relationship with clients.

“Plan B”

The analysis of risks is no safeguard against failure, just an evaluation that underpins the proposal of the so-called Contingency Plan, or “plan B”. This work foresees the difficulties of implementation and alternative courses of action, should these obstacles materialize throughout the process of implementing the trade marketing plan. A “plan B” is not
obligatory, but if it is made, and eventually used, it will demonstrate the degree of maturity of the trade team. The tip is to create an alternative plan with high-impact-on-results actions and ease of implementation, but which further have a score below the rest in requisites such as strategic alignment and non-financial impacts. Don’t forget that, in the hour of need, results will always speak louder. Particularly if the problem affects the company in the short term.

If you wish to know more about this process, read “Trade marketing – distribution strategies and sales execution ” – Ed. Atlas/ 2010 (D’Andrea e Consoli), or request the learning system in Excel by e-mail from:

*With Daniel D’Andrea and Luiz Sedeh
Originally published at Mundo do Marketing website in 12/20/2012