Brand Building Strategies To Maximize Sales and Profits

Trade Management Essentials To Grow And Scale Your Brand

Dan Lohman
Oct 1 · 10 min read

The art and science of getting your products on more store shelves and into the hands of more shoppers — without going bankrupt in the process. Sell more, gain more runway.

It’s estimated that 25% of a brand’s gross sales are tied to their trade management budget. The challenge is that over 70% of all trade spending is wasted or ineffective. Knowing how to maximize each and every promotional opportunity is critical to your longterm survival as a brand.

Let’s face it, retail is “pay to play” and big brands have a substantial unfair competitive advantage. You feel like the deck is stacked against you and for good reason — but it doesn’t need to be.

What if I told you that there was a better way? What if I told you that you were not alone and that even the big brands struggle with this? It’s true — and I have first-hand knowledge working with retailers as well as big and small brands.

The real goal of trade marketing is to introduce your brand, or product, to a new customer — PERIOD. While it’s nice to reward an existing customer to make another purchase, there are better more effective ways to do that — I dig into that on my Brand Secrets And Strategies podcast, articles and .

Trade marketing can be a complicated thing to manage but don’t worry, I’m here to help. Let’s start with the basics.

Trade marketing is typically the single largest line item on a company’s income sheet, but how do you know if your trade marketing is effective?

Most promotions are ineffective and fail to encourage new shopper trials — the primary goal of every promotion. While rewarding loyal shoppers to make repeat purchases can prove beneficial, new shopper engagement is the key to growing brand sales.

More importantly, effective promotions help retailers compete more effectively by driving shopper traffic into their stores and away from their competition. This is the greatest bargaining chip any brand can offer a retailer. Savvy brands leverage their ability to drive retailer sales when they negotiate with retailers for premium shelf space, incremental merchandising opportunities, etc.

Make it easy for shoppers to find and buy your products

This all begins with effective merchandising. Shoppers can’t buy your products if they can’t find them. Getting your products properly merchandised on a store shelf is the best way to explode sales. This helps you maximize promotions and this improves the shopper journey.

The first impression that most consumers have of your brand is on a retailer’s shelf. Most shoppers search for their favorite brand first. Make sure your product stands out on the crowded shelf. On-shelf merchandising IS your first impression!

You put a lot of energy into branding your packaging. Make it easy so current and future shoppers buy your products over the competition. Shelf merchandising needs to be consistent across every store and every retailer, especially at health food stores.

Poor product placement and confusing merchandising are the single biggest problem most brands face. You worked hard to get your products on the shelf — make it count! Identify the prime location for your brand and validate it with fact-based insights.

Your REAL brand health is tied to what you contribute to profitable category growth

You’re constantly told that sales velocity is what matters most to retailers and that it measures how long your brand will remain on the shelf. Nothing could be farther from the truth. Brands with deep pockets can “buy” sales volume (velocity). While this might look good on a canned top-line (templated) report, this typically pulls profits from the category.

Knowing the true health of your brand is something most brands overlook or ignore. It can be your single best point of negotiation with a retailer and it can dramatically influence the quality of the investments you attract.

The real health of your brand is measured by the profitable growth it drives in the category. The real health of your brand is its ability to drives sales at a premium price. Premium products that are organic, gluten free, allergy free, that support a plant-based diet, etc drive contribution in the category — what retailers REALLY want.

The health of your brand is measured by it’s contribution to the category in the form of sales and profits. This is critically important to every retailer. They want to know that if they place your product on their shelves it will increase profits and shopper foot traffic.

While other brands brag about their product’s category ranking, you need to focus on how your brand contributes more to sustainable category growth than they do.

Generically speaking, retailers do not make anything. They sell real estate in the form of the space your product occupies on their shelves. Retailers want three things; more shoppers in their stores, a reasonable profit, and a competitive advantage in their market. Savvy retailers appreciate brands willing and able to help them achieve this fundamental objective. They sometimes reward those brands with incremental opportunity’s not available to other brands.

This is why knowing your brand health matters. This requires that you know how to evaluate promotions and make choices that are best for your brand health. Being able to say “no” to some promotion requests is the first step.

Having the right data can explode sale — do you know the difference? Leverage data in your selling story.

This requires that you know how to mine the data maze. Do you know the differences between the different types of data and how to use it? This is a trick question. Few truly understand the complexities of the different types of data.

For example, if you wanted to know how your products are driving category sales in natural food stores in Denver Colorado, you could not answer that question with traditional data sources. While you could see how your brand is performing in some stores, you could not compare yourself to other brands in the market, across all natural stores.

You’ve most likely been told that bringing canned topline (templated) reports to your retail appointments is critical to your success. The reality is that most canned topline reports are simply a waste of ink and paper.

Sounds like a pretty harsh statement, let me explain. Savvy retailers already know how your brand is performing on their shelves. They do not need a report confirming what they already know. They do not need a report telling them the exact same thing every other brand is telling them — even with your unique spin.

What they REALLY need are actionable insights that they do not have access to on their own. They need actionable insights that your competitors are not providing them. This is where you come in and how you can differentiate yourself from other brands.

To add to this, sharing the same reports that every brand shares WILL NOT differentiate your brand from your competition. Also, using the same report across multiple categories overlooks the key sales drivers in your category.

There is a big difference between how customers shop for snacks compared to how they shop for pet food.

Every retailer needs to know that if they put your product on their shelves that it will grow category sales and increase shopper traffic in their stores. Once that happens, you then need to validate and reinforce that your brand deserves to remain on their shelves because it continues to achieve those results.

Traditional methodologies focus exclusively on metrics that overlook the contribution natural brands provide to category growth. I have a much better solution that has a long successful track record!

Going beyond templated reports will level the playing field with big brands

Now that you have the basic tools in place, you need to know how to use them to achieve the best results. The statement “knowledge equals great power” comes to light.

There is a big difference between basic report analysis and being able to tell a compelling story with data. This is where you have an opportunity to really set yourself apart from other brands and to gain a significant and sustainable competitive advantage. Let me explain.

Category Management is the great equalizer between big and small brands. It is also one of the most overused and misunderstood terms in the natural channel. A talented category manager is worth their weight in gold.

Category Management includes the advanced strategies required to make it easier for customers to find your products where they shop with effective merchandising, increased distribution, maximizing your promotional effectiveness, reducing wasteful trade spending, differentiating your brand at retail, giving you more runway from your funding, growing sustainable sales in any economy, reduce and even eliminate out-of-stocks which equals disappointed customers and lost sales, help you stand out on a crowded shelf, help you develop a loyal committed community around your brand, and much much more.

It can level the playing field, giving you a substantial significant competitive advantage. More importantly, it can help you save valuable time and money. This is why big brands rely so heavily on category management. It’s proven itself repeatedly to be the best sales driver for brands and retailers.

This is the most important skill every brand, retailer, and entrepreneur needs in their tool-box.

“If you want to play at the level of the big brands, you need to BE at their level”

Traditional category management relies heavily on canned topline (templated) reports and templates. While these are a great starting place for any analysis, they are NOT enough to help differentiate you from your competition. Most of these strategies lack creativity and rely heavily on what I call “push button category management.”

I coined the term “True Category Management” many years ago to help brands like yours take this to the next level and beyond. I’ve spent my career pushing big brands around effectively beating them at their game because I focus on what really matters — the customer. Nothing happens until someone buys something and shoppers can’t buy your products if they can’t find them.

True category management focuses on the basics — what retailers REALLY need from you and your brand. It then overlays those strategies to help you help your retailer partner compete at the highest levels. It looks at the customer journey from the shopper’s perspective.

Now back to trade marketing. The skills we just covered are critical to your basic understanding of trade management. They are the building blocks to helping you properly assess and measure an event’s promotional effectiveness. The other key part of an effective promotion is strategy.

Here are eight strategies to help you maximize your trade marketing ROI.

1. Creativity

Most companies repeat promotions annually in addition to copying competitor promotions. Companies that have creative strategies typically have greater success growing sustained sales. Effective promotions encourage incremental and impulse purchases. Co-promote within the brand and with complimentary items (such as chips and dip) when possible. The ultimate goal is to increase consumer purchases after the promotion ends. This occurs when new customers become committed loyal shoppers.

2. Purpose

Every promotion should have a well-defined and understood purpose. Design promotions around opportunities to build your brand such as important causes (Earth Day, back-to-school, etc) and product demos. Don’t promote to give your product away. My favorite example is a large potato chip manufacturer that continually has BOGO’s (buy one get one free) during the major sporting events and on holidays — occasions consumers would probably pay a premium. Category leaders should instead schedule deep promotions when category buying is low.

3. Consistent brand messaging

Most promotions fail to connect with the shoppers. Build a strategy around your consumer’s specific needs and wants. Communicate a consistent message across all marketing vehicles by integrating sales strategies through different mediums including and especially social media.

4. Plan ahead

Be prepared to support the promotion by having additional product on hand. Use category management principles to accurately predict consumer takeaway and to identify the ultimate promotion price point. Out-of-stocks are a huge problem for some brands. Never miss a sale due to poor planning on your part. Also, a few cents off in either direction can dramatically affect consumer take away.

5. Strong brand building strategy

Promotions that don’t grow category and brand sales are a huge waste of resources and money. Set specific goals and objectives for each promotion, then evaluate promotions afterward to highlight successes and/or missed opportunities. Account for all costs including deductions, retailer fees, scan down rate, bill back, missed sales due to out-of-stocks, off-invoice rebates, menu fees, fixed costs, forward buys and miscellaneous costs when evaluating promotion effectiveness. Include retail, distributor, broker, and supplier execution in your evaluation.

6. Promotion schedule

Some companies have very predictable promotion schedules that train customers to purchase their brand only when they are on sale. While it’s nice to reward consumers for being loyal, the goal of all promotions is to encourage shoppers to be loyal and to invite new customers to try your products. Learn your competitors’ strategies and the effectiveness of their promotions. Build your strategy around their promotional efforts to maximize every opportunity to invite their shoppers to try your brand.

7. Efficient trade fund management

This can be one of the most difficult areas to effectively manage due to the complexity of differing retailer programs and systems. Identify and adopt systems that allow you to effectively manage trade spending, cash flow across simultaneous promotions at multiple retailers, promotion reconciliation, deductions, and promotion analysis and inventory movement throughout the supply chain. Integrate your system with retailer and market data to maximize your results. This goes beyond using canned reports and “push button solutions”. This requires deep dive analysis.

8. Pay on scan

Promotions can be set up a lot of different ways. The most effective way to manage promotions and improve your ROI is to pay for what shoppers purchase. The way this works is to set up promotions that reimburse retailers for items scanned through their registers. This is far better than paying a lump sum and taking a chance that the retailer may not help you drive sales at every location.

Dan Lohman

Written by

I teach natural brands how to save time and money with proven scalable strategies to grow sustainable sales and profits. More about me at CMS4CPG.com/secrets

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