Understanding Marketing: The Differences Between Trade & Retail

If there’s one thing you should understand about the functions of trade and retail marketing, it is that they should not be conflated. While they may seem broadly similar, the two areas and subtly different; one is not a subdivision of the other. (US website SmallBusiness.Chron.com has a helpful definition here.)

In a nutshell, trade marketing is the relationship between a manufacturer and its retailer partners. To begin with, trade marketing was a means of organising bespoke promotions for larger vendors. It was a secondary function for the marketing teams of many manufacturers, but with the increasing growth of category management within the fast-moving consumer goods (FMCG) industry in particular came the understanding that trade marketing was a more specialist function. Point of purchase activities, marketing and sales promotions increasingly began to fall under the function’s remit.

Now trade marketing is ubiquitous across industries and organisations. When talking about sms surveys, you’d be forgiven for talking only in terms of consumers, but trade marketing teams use the technique too. While retail marketing is the way retail brands – high street shops, in other words – talk to their customers, and is what many perceive to be marketing in its most common form, it nonetheless shares many characteristics with trade marketing. Both disciplines feature a seller talking with a potential buyer, after all.

However, since consumer goods brands have had to get used to a new way of marketing, the dividing lines between trade and retail marketing have become blurred. As traditional above-the-line and below-the-line advertising has become less effective with the onset of mobile devices, retailers have had to change the way they engage with consumers – often by attempting to alter the behaviour of those consumers.

The ability to track and interpret specific shopper segments is now as important as marketing products to consumers. Companies that do well at integrating their marketing campaigns for both trade and retail markets are invariably more efficient with their marketing spend, not mention faster at making marketing decisions.

This kind of joined-up strategy also makes a manufacturer far more attractive to a retailer. If that retail brand has to work less hard at marketing a product to its consumer base because the groundwork has already been done by a manufacturer partner, it can concentrate its own marketing budget on promotions, rather than the product itself.

So what does this mean for trade marketing? It’s at something of a fork in the road. On the one hand, such teams could focus more keenly on marketing to the trade, rather than on being teams that market products within the trade space. This would have the knock-on effect of teams looking beyond retailer partners and on towards the ultimate targets: the consumers themselves.

On the other hand, more responsibility could be taken on by trade marketing teams in the retail marketing process. Deeper strategic planning and consumer insight would come to the fore, while the sales function, often covered in some way by many trade marketing teams, would be split out and left solely to dedicated sales teams.

In short then, while they overlap at many points, trade marketing is far more than simply an offshoot of retail marketing, as this Mark McCulloch article explains further.