As we continue our series on profits we are going to dive into trade spend and marketing spend. We all know there are many different places you can spend money in the food industry. Every one of them will reduce your profits. The challenge for you is to find the expenditures that will result in greater sales and more dollars in your pocket. To promote your products there are two overall categories you need to understand and focus on: trade spend and marketing spend.

We can define trade spend as the money you invest with retailers to drive the sales of your products. Any time you reduce your selling price from the regular price this counts as trade spend. We have discussed before how retailers give you many options to reduce your price. You can participate in ads, in store specials, loyalty programs, themes and other promotions.

You do have to participate in some retailer-driven programs or they will find other suppliers who will. These are the tools they use to differentiate their offering and drive traffic into their stores. The challenge for you is to find the programs that deliver the best return.

Consider all of the options available and select the opportunities that are best for your products. Do not wait for category managers to build a promotion plan for you. That is not their job; you should be driving the process. Yes, they will be the ultimate decision maker but you have a much better chance of getting what is right for you if you build the plan and make recommenda- tions. Your category managers will see this as proactive and a positive for your business. These people are being stretched further all the time so any opportunity to reduce the workload is welcomed. It is also true retailers are expecting more from suppliers as they see you understanding your items and how to sell them.

Once you do develop the plan and get confirmation from your category manager you need to watch to see what happens.

You should agree with the category manager what the expectations are for each ad or program. This is the only way you can determine if the investment was worthwhile or should be repeated.

I am sure if you have investments you are watching the returns and if one stock continues to underperform or lose money you make a change. You should think of your trade spend the same way. If a dis- counted price for an ad does not deliver the results you expect, make a change. Pick another tool or change the timing. Do not keep discounting your product without generating the results you expect.

Your trade spend should be the best tool you have to drive sales. It is implemented at the shelf or online where consumers make the decision to buy.

Marketing spend is tougher to justify

Marketing spend is defined as all of the money you invest outside the store to generate sales and build your brand. The opportunities are endless but they are also costly and you have to really be sure they ultimately lead to sales or a stronger brand that leads to sales. I am sure you have many people coming to you for spon- sorships, signs in the local rink, summer festivals and a myriad of other places to spend your money.

Any time you do make these investments I would encourage you to find the solution that will lead people to the store and ultimately decide to buy. Coupons, online coupons and sampling are all proven strate- gies to get more sales. When people do approach you with marketing spend opportunities always consider the options that will lead to sales. Many exhibi- tions will be opportunities for paid sampling or selling direct to consumers. You can get a lot of great feedback at these events. Do a quick survey to understand what the consumer perceives about your product or to see if they understand your unique selling proposition. Always explore the tactics that will give you a return on your investment.

The days of paying to have your logo on a sign are in the past unless you feel it is the right thing to give back which is awesome if you are in the position to do it.

When you do make invest- ments in marketing spend, remember to share these with retailers. Perhaps coupons at a big event will lead to sales. They need to know so they have inventory. You might have a sign that says available at...

Make sure they know you are promoting them.

You have to make invest- ments to sell your products. Remember that is your job so be proactive, pursue opportunities that lead to sales, analyze the results and change it up if it isn’t working.

If you have any questions about trade spend or marketing spend, please give me a call at (902) 489-2900 or send me an email at pchapman@gpsbusi- ness.ca. Next month we will talk about the differences between marketing and trade spend and how they can impact your profits.

RETAIL NEWS Pre-occupied retailers

It is summer and many peo- ple are on vacation, plus we have Amazon buying Whole Foods and Sobeys are going through a major restructuring. It is tough to get attention from retailers right now. So what do you do?

1. Continue to reach out to your category managers and assistant category managers. You want to keep communication flowing as much as possible. They don’t have time to chat but you need to find legitimate reasons to call. No news is not good news.

2. Get in the stores and if you see things that are not right then help them out and call. They are pre-occupied right now but their number one objective is still to deliver sales and results. They might be focused on a broader list of issues so if you can be a resource then take advantage of it. Just try to put the issues into perspective so that when you call they appreciate it as opposed to someone taking time for something very small.

3. Continue to bring opportuni- ties to the table. You know the tools they have and where you can help them. Bring these to them and in some sense take a bit of the workload off their plate. You might have a better chance getting what you want and helping them.

4. In the case of Sobeys remember they are making decisions within the business that will impact people’s jobs. You have to be sympathetic to that. I went through it at Loblaw and it isn’t easy for anyone. It is obviously tough for those leaving, especially in markets where a similar job is tough to find. It is also tough for those staying. They have a job but see co-workers having to leave and in many cases they will have to learn a new way of doing their job.