Common terminologies used in Trade Marketing:
Before going to ‘Common Terminologies’ I would like to describe something about Trade Marketing.
Trade marketing can be defined as the discipline of marketing/sales that relates to increasing the demand for company’s brands/products at retailer, wholesaler, or distributor level and ensures the brand bondage so that the channel/supply chain partners advocate for the products to the customers and influence the buying decision of buyers in a competitive scenario.
Normally, a company’s sales has three wings – 1. General Trade (GT), 2. Modern Trade (MT), and 3. Alternate or B2B. Trade marketing especially deals with GT and MT.
Sales Chain Partner: This is also termed as Supply Chain Partner or Channel Partners who play a vital role to reach products from manufacturer to customer. They include retailer, wholesaler, and distributor.
In some organizations Trade Marketing is also called B2B marketing or business-to-business marketing because all the promotional activities are aimed at increasing the demand for the products among the various supply chain partners.
The main objective of Trade Marketing is to ensure the consistent supply and availability of the product to the end consumer through different trade promotions. Incentives are given to the intermediaries for effective promotion of the product at their end.
Various forms of trade promotion include activities such as – cash discount, free product, purchase scheme, display of the product, branded merchandise, more shelf space, and even word of mouth.
Common Trade Marketing Terminologies:
Retailer: The businessmen who normally operate a shop/retail outlet who buy products from distributor/wholesaler and sell to customers at a profit.
Wholesaler: The businessmen who normally operate a shop/retail outlet who buy products in bulk quantity from distributor/manufacturer and sell to retailer at a profit.
Distributor: The businessmen who normally operate a business organization commonly termed as “Distribution House” who buy product from manufacturer and resell to retailer/wholesaler at a profit. Distributors are also called commission agent or merchant. In Bangladesh Distributors are mostly appointed at district level; may also be appointed at thana level depending on business volume. There are some National level distributors also under whom local district/thana level distributors are appointed. For example, Fair Distribution, Transcom, Kallol, etc. are National level distributors. Distributors are supposed to invest in products, space, infrastructure and human resources. Distributor earns commission after selling products to retailers/wholesalers and compensate his costs by his earned commission.
Retailer, wholesaler, and distributor buys product but do not necessarily take the ownership of the product. Ownership lies with the manufacturer until they are sold to the customer.
Vendor: Vendors are the third parties used by the manufactures to design/run any promotional activities on manufacturer’s behalf. Vendors possess special skills at doing some special activities. Vendors are paid by the manufacturer for their jobs.
DSR: Distributor’s Sales Representative also called Sales Officer (SO), Customer Executive, Sales Executive (SO), Retail Sales Officer (RSO), etc. is employed by the distributor and supervised by the Territory Managers who is mainly responsible to make available of company products to retail outlets. In some cases, they are also being employed by the manufacturers. Whoever employs them (manufacturer/distributor), their responsibility remains the same.
TM: A Territory Manager also called Territory Sales Manager or Territory Officer is stationed at Distribution House and is mainly responsible for managing distributors of his assigned territory. Territory Managers are employed by the manufacturer.
AM: Area Manger also called Area Sales Manager is employed by the manufacturer and supervised by the Regional Manager to manage/supervise the Territory Managers of his assigned area.
RM: Regional Manager also called Regional Sales Manager is employed by the manufacturer and supervised by the National Sales Manager to manage/supervise the Area Managers of his assigned region.
NSM: National Sales Manager also called Sales Manager is responsible to drive national sales. Normally NSM reports to the CEO/MD of any organization.
Discounts: Discounts offered to distributor and/or retailers to promote sales either in the form of cash or kinds.
Cash Discount: It refers to certain discount percentage or amount offered to distributor/retail. For example, 10% discount on 12 pcs purchase or Tk 10,000 purchase at a single invoice.
Kinds: Kinds refer to free products offered to retailers to promote sales. For example, 1 pcs free with the purchase of 12 pcs.
SKU: It is the short form of Stock Keeping Unit commonly used to describe all the items produced by a manufacturer. For example, 75 gram lux soap is a SKU, 100 gram lux soap is another SKU, 200 gram lux soap is another SKU, and so on.
Market Visit: TM/AM/RM is supposed to make regular market visit as per their PJP to understand/monitor the market.
PJP: It refers to Permanent Journey Plan, the visit plan that every TM/AM is supposed to prepare and submit to his immediate supervisor on monthly basis.
JC: It is Journey Cycle that refers to monthly meeting held in regional office or head office once in a month, usually at the start of a calendar month.
Primary: It refers to product purchase by a distributor from a manufacturer.
Secondary: Secondary refers to sales of products by a distributor to his retailers at the prices set by the manufacturer. It is also termed as IMS or In Market Sales. A distributor’s earning (commission) comes from this secondary.
Claim: Generally claims are expenses made by distributors on manufacturer’s behalf to run different activities designed by manufacturers at trade under the direct supervision of TM. Different forms of claims include Secondary Claim, Damage Claim, Signboard Rent, Sales Officers Salary/Incentive, etc.
Secondary Claim: Secondary claims are the expenses incurred by the distributors to run manufacturer’s trade promotions designed for retailers/wholesalers. Secondary claims need to generate by a distributor after the end of calendar month to get reimbursement from manufacturer. For example, a manufacturer designs a trade promotion like a retailer will get 1 pcs free with 12 pcs purchase. Distributor is supposed to give this free 1 pcs to retailer while selling 12 pcs to him and after end of the month the distributor will claim it to the manufacturer in the form of secondary claim with necessary supporting documents.
Primary Claim: Primary claims are claims that are paid to distributors in advance during distributor’s primary lifting. Primary claims need not to generate rather, it is automatically paid to distributors during their primary lifting.
QPS: QPS refers to Quantity Purchase Scheme, can also be termed as Value Purchase Scheme (VPS), which is designed for retailers under which retailers are supposed to purchase certain quantity/amount of products within a defined period which is generally longer than one month. It is slap based purchase scheme. For example, a retailer is offered certain cash/kind upon purchase of a definite slab like buy Tk 50,000 (or 100 pcs) and get an electric Iron free, buy Tk 100,000 (or 200 pcs) and get a Blender free, or buy Tk 200,000 (or 400 pcs) and get a smartphone free, etc.
DM: It refers to Deductible Merchandise offered to retailers with certain amount of purchase as per promotional scheme. For example, 1 pcs free with 12 pcs purchase, this free item is called DM. So, a retailer will get 13 pcs and will pay for 12 pcs.
ROI: It is Return on Investment expressed in percentage by which a distributor can understand his profitability doing business with manufacturer. ROI equals to Yearly Net Profit divided by Total Investment.
Damage: ‘Damage’ refers to the goods that are not in salable condition and returned by retailers to distributors. Distributors take back damaged goods as per manufacturer’s Damage Return Policy from retailers and claim to manufacturer for adjustment.
POSM: POSM is the short form of Point of Sales Materials that refer to different communication tools used by the manufacturer at the retail outlets.
Permanent POSM: These POSMs are made for longer period of time such as backlit or signboard.
Temporary POSM: These POSMs are made for shorter period of time to communicate monthly promotional offerings such as danger, bunting, poster, etc.
Backlit: It refers to signboard placed at the top of the retail outlet. It is equipped with light bulbs that makes the signboard visible at night. Usually manufacturers pay for the light bill on monthly/quarterly basis to retailers.
Flex: Flex refers to signboard that are not equipped with light bulbs. For flex no rent paid to retailers.
Fascia: Fascia refers to the banner used in the backlit/flex to print the communication.
Shelf Display: It refers to trade promotion designed to ensure display of products at retailer’s shelf for a certain period in an organized way for which retailers are paid.
Before going to ‘Common Terminologies’ I would like to describe something about Trade Marketing.
Trade marketing can be defined as the discipline of marketing/sales that relates to increasing the demand for company’s brands/products at retailer, wholesaler, or distributor level and ensures the brand bondage so that the channel/supply chain partners advocate for the products to the customers and influence the buying decision of buyers in a competitive scenario.
Normally, a company’s sales has three wings – 1. General Trade (GT), 2. Modern Trade (MT), and 3. Alternate or B2B. Trade marketing especially deals with GT and MT.
Sales Chain Partner: This is also termed as Supply Chain Partner or Channel Partners who play a vital role to reach products from manufacturer to customer. They include retailer, wholesaler, and distributor.
In some organizations Trade Marketing is also called B2B marketing or business-to-business marketing because all the promotional activities are aimed at increasing the demand for the products among the various supply chain partners.
The main objective of Trade Marketing is to ensure the consistent supply and availability of the product to the end consumer through different trade promotions. Incentives are given to the intermediaries for effective promotion of the product at their end.
Various forms of trade promotion include activities such as – cash discount, free product, purchase scheme, display of the product, branded merchandise, more shelf space, and even word of mouth.
Common Trade Marketing Terminologies:
Retailer: The businessmen who normally operate a shop/retail outlet who buy products from distributor/wholesaler and sell to customers at a profit.
Wholesaler: The businessmen who normally operate a shop/retail outlet who buy products in bulk quantity from distributor/manufacturer and sell to retailer at a profit.
Distributor: The businessmen who normally operate a business organization commonly termed as “Distribution House” who buy product from manufacturer and resell to retailer/wholesaler at a profit. Distributors are also called commission agent or merchant. In Bangladesh Distributors are mostly appointed at district level; may also be appointed at thana level depending on business volume. There are some National level distributors also under whom local district/thana level distributors are appointed. For example, Fair Distribution, Transcom, Kallol, etc. are National level distributors. Distributors are supposed to invest in products, space, infrastructure and human resources. Distributor earns commission after selling products to retailers/wholesalers and compensate his costs by his earned commission.
Retailer, wholesaler, and distributor buys product but do not necessarily take the ownership of the product. Ownership lies with the manufacturer until they are sold to the customer.
Vendor: Vendors are the third parties used by the manufactures to design/run any promotional activities on manufacturer’s behalf. Vendors possess special skills at doing some special activities. Vendors are paid by the manufacturer for their jobs.
DSR: Distributor’s Sales Representative also called Sales Officer (SO), Customer Executive, Sales Executive (SO), Retail Sales Officer (RSO), etc. is employed by the distributor and supervised by the Territory Managers who is mainly responsible to make available of company products to retail outlets. In some cases, they are also being employed by the manufacturers. Whoever employs them (manufacturer/distributor), their responsibility remains the same.
TM: A Territory Manager also called Territory Sales Manager or Territory Officer is stationed at Distribution House and is mainly responsible for managing distributors of his assigned territory. Territory Managers are employed by the manufacturer.
AM: Area Manger also called Area Sales Manager is employed by the manufacturer and supervised by the Regional Manager to manage/supervise the Territory Managers of his assigned area.
RM: Regional Manager also called Regional Sales Manager is employed by the manufacturer and supervised by the National Sales Manager to manage/supervise the Area Managers of his assigned region.
NSM: National Sales Manager also called Sales Manager is responsible to drive national sales. Normally NSM reports to the CEO/MD of any organization.
Discounts: Discounts offered to distributor and/or retailers to promote sales either in the form of cash or kinds.
Cash Discount: It refers to certain discount percentage or amount offered to distributor/retail. For example, 10% discount on 12 pcs purchase or Tk 10,000 purchase at a single invoice.
Kinds: Kinds refer to free products offered to retailers to promote sales. For example, 1 pcs free with the purchase of 12 pcs.
SKU: It is the short form of Stock Keeping Unit commonly used to describe all the items produced by a manufacturer. For example, 75 gram lux soap is a SKU, 100 gram lux soap is another SKU, 200 gram lux soap is another SKU, and so on.
Market Visit: TM/AM/RM is supposed to make regular market visit as per their PJP to understand/monitor the market.
PJP: It refers to Permanent Journey Plan, the visit plan that every TM/AM is supposed to prepare and submit to his immediate supervisor on monthly basis.
JC: It is Journey Cycle that refers to monthly meeting held in regional office or head office once in a month, usually at the start of a calendar month.
Primary: It refers to product purchase by a distributor from a manufacturer.
Secondary: Secondary refers to sales of products by a distributor to his retailers at the prices set by the manufacturer. It is also termed as IMS or In Market Sales. A distributor’s earning (commission) comes from this secondary.
Claim: Generally claims are expenses made by distributors on manufacturer’s behalf to run different activities designed by manufacturers at trade under the direct supervision of TM. Different forms of claims include Secondary Claim, Damage Claim, Signboard Rent, Sales Officers Salary/Incentive, etc.
Secondary Claim: Secondary claims are the expenses incurred by the distributors to run manufacturer’s trade promotions designed for retailers/wholesalers. Secondary claims need to generate by a distributor after the end of calendar month to get reimbursement from manufacturer. For example, a manufacturer designs a trade promotion like a retailer will get 1 pcs free with 12 pcs purchase. Distributor is supposed to give this free 1 pcs to retailer while selling 12 pcs to him and after end of the month the distributor will claim it to the manufacturer in the form of secondary claim with necessary supporting documents.
Primary Claim: Primary claims are claims that are paid to distributors in advance during distributor’s primary lifting. Primary claims need not to generate rather, it is automatically paid to distributors during their primary lifting.
QPS: QPS refers to Quantity Purchase Scheme, can also be termed as Value Purchase Scheme (VPS), which is designed for retailers under which retailers are supposed to purchase certain quantity/amount of products within a defined period which is generally longer than one month. It is slap based purchase scheme. For example, a retailer is offered certain cash/kind upon purchase of a definite slab like buy Tk 50,000 (or 100 pcs) and get an electric Iron free, buy Tk 100,000 (or 200 pcs) and get a Blender free, or buy Tk 200,000 (or 400 pcs) and get a smartphone free, etc.
DM: It refers to Deductible Merchandise offered to retailers with certain amount of purchase as per promotional scheme. For example, 1 pcs free with 12 pcs purchase, this free item is called DM. So, a retailer will get 13 pcs and will pay for 12 pcs.
ROI: It is Return on Investment expressed in percentage by which a distributor can understand his profitability doing business with manufacturer. ROI equals to Yearly Net Profit divided by Total Investment.
Damage: ‘Damage’ refers to the goods that are not in salable condition and returned by retailers to distributors. Distributors take back damaged goods as per manufacturer’s Damage Return Policy from retailers and claim to manufacturer for adjustment.
POSM: POSM is the short form of Point of Sales Materials that refer to different communication tools used by the manufacturer at the retail outlets.
Permanent POSM: These POSMs are made for longer period of time such as backlit or signboard.
Temporary POSM: These POSMs are made for shorter period of time to communicate monthly promotional offerings such as danger, bunting, poster, etc.
Backlit: It refers to signboard placed at the top of the retail outlet. It is equipped with light bulbs that makes the signboard visible at night. Usually manufacturers pay for the light bill on monthly/quarterly basis to retailers.
Flex: Flex refers to signboard that are not equipped with light bulbs. For flex no rent paid to retailers.
Fascia: Fascia refers to the banner used in the backlit/flex to print the communication.
Shelf Display: It refers to trade promotion designed to ensure display of products at retailer’s shelf for a certain period in an organized way for which retailers are paid.
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