Supplier-funded field marketing can improve customer experience, says Tracey Bagshaw, adding real value for the retailer

Used to enhance a product's profitability, trade promotion is a key area of collaboration between brands and retailers and when it works, it works well.

These temporary cost price cuts, given by manufacturers to retailers, encourage supermarkets to stock particular goods at reduced prices and thus, in theory, lead to improved sales. Additional incentives offered by a brand can include anything from advertising contributions to retrospective discounts, while in return the brand would expect at least a guaranteed listing and for its products to take priority in the range plan.

In practice, however, the management of these business partnerships is not so straightforward. Indeed, too many brands have little idea how effective their trade promotion spend is, especially in a recession and retailers obviously have their own agendas and ideas, a point reinforced by Asda CEO Andy Bond, who has announced that Asda's focus for 2010 is to be "sucking out the promotional money on offer from our suppliers" to invest it in "lowering prices across the board".

This seems to reflect a widespread view that suppliers' support should be channelled towards price, be it offers or EDLP.

But there are other ways for the trading relationship between retailers and manufacturers to be enhanced: supplier-funded field marketing, for instance, adds instant value to the supermarket by improving customer experience. Services include handling deliveries, replenishing stock and merchandising product in the store.

The role also encompasses positioning of offers and the relocation or changeover of certain products as well as in-store sampling and mystery shopping. Indeed, many international retailers have found that outsourcing these tasks allows their own personnel to focus fully on defined sales duties significantly optimising the efficiency of their businesses.

Directly coinciding with the new Groceries Supply Code of Practice, it is time to constructively challenge the view that price reductions are the only way to serve the interests of retailers, emphasising instead the mutual benefits of a successfully executed trading partnership.

Tracey Bagshaw is MD of the Service Innovation Group UK.