Trade spend outlays continue to dominate the sales & marketing budgets of foodservice manufacturers. This is despite a persistently high level of dissatisfaction with the cumbersome administrative burdens of trade spend programs and the lack of measurable results. Manufacturers want a clearer understanding of how targeted trade promotions influence downstream demand, but instead they become enmeshed in unproductive administrative paperwork such as resolving and processing duplicate claims.
The current trade spend paradigm also does not work in the best interests of distributors. While they do benefit in the short term from the financial impact of the trade dollars they receive from their suppliers, distributors do not obtain insights from current trade spend practices that could help them more effectively grow demand across products and categories. Of more benefit would be product and assortment education from their suppliers, enabling them to identify tangible ways to tap into new sources of sales growth.
Category management, a standard practice in many retail sectors that is now gaining currency in foodservice, can be a way to attain this knowledge, use it to effectively drive growth for both manufacturers and distributors, and ultimately to phase out the unproductive aspects of the current trade spend paradigm. Continue reading