Trade relationship management (TRM)

Trade relationship management (TRM)There was a time when markets were controlled solely by the demand-supply mechanism. The only humans who could influence the market were the sellers (Panwar, 2001). Things have however changed over time. Human element has gained utmost importance in today’s corporate scenario and the markets are no more controlled by the sellers. These are rather controlled by the customers. Be it the external customers i.e. buyers of the company’s offerings or the internal customers i.e. the employees (Panwar, 2001). Companies today have realized the importance of both their customers as well as the employees and that is why the concepts of customer relationship management (CRM) and employee relationship management (ERM) are being adopted by every contemporary firm. However in spite of these efforts, the firms are still finding it tough to survive (Sethi, 2012). It is obvious to ask where do they lack? Are these contemporary firms still missing out something?

What’s next after CRM and ERM?  

The answer has been recently offered by an Indian, Dr. Sanjiv Sethi who is a retail specialist by profession. He studied the current scenario and found that there is yet another human element the firms need to recognize. This human aspect relates to the trade intermediaries or the middlemen involved in the distribution of products (Sethi, 2012). Though a lot of researches have recently established the need for improvising supply chain management by the firms. These researches are somehow restricted to recommending the distribution channels so as to maintain accuracy in delivery schedules. Probably none of these researches looked inside these distribution channels the way Dr. Sethi has done. He studied the current scenario in detail and found that though the firms are concentrating a lot on educating consumers and employees about the their offerings, very little is often done to educate the middlemen. In spite of successfully achieving the target customers’ Top of Mind Awareness (TOMA) and Intention to Purchase (ITP), the firms are still unable to secure high sales figures (Sethi, 2012). He has conceptualized a new management term ‘Trade Relationship Management’ (TRM) with a view to fill this gap.

What is trade relationship management and why it is required?

Trade relationship management is a process to strengthen the trade chain of the firms. The trade in trade relationship management refers to the middlemen i.e. the distributors/retailers (Sethi, 2012). Trade relationship management draws the attention of companies towards the fact that these middlemen are the direct link between a company and consumers. The need therefore is to develop the trade as company’s representative to the consumers. The enhanced promotional efforts on mass media including television, newspapers and social media aware the consumers rapidly of every new product. In most cases if the promotion is effective. It successfully creates an intention to purchase the product among the consumers. This is the point where the retailers come into scene (Sethi, 2012). The consumers access these retailers to buy the product and many times it is found that the retailers have little idea of new products launched by the companies. This reflects a clear gap  between companies’ awareness efforts directed towards the consumers and the retailers resulting into a gap between consumers’ intention to purchase and actual purchases (Srinivasan, 2012).

How TRM fills the gap between customers’ intention to purchase and actual purchases?

While the companies today invest huge resources in making consumers aware of any new product launches. They make minimal investments to update their trade partners i.e. retailers (Srinivasan, 2012). Not only for the new products, even for the existing ones there are usually no formal retailer education programs by the companies. There retailers are educated about the product and product uses, product advertisements, the brand ambassadors, or any changes in product packaging etc. The retailers are often told only about the sales promotion schemes aligned with different products. There are hardly any retailers’ helpline where they can clear their doubts with the company’s representatives. The companies do not offer any training to the retailers to attend the customers’ queries. The result is that though consumers intend to purchase, many of them don’t end up with purchasing owing to retailers’ inability to respond to their queries. A large chunk of sales is lost due to this knowledge gap between the retailers and the consumers. Trade relationship management has been developed as a way out (Sethi, 2012).

Trade relationship management is a corporate philosophy that intends to develop better trade. Though the concept has been innovated for the retailing industry especially to help the large unorganized retail sector in India, it can be applied across any industry throughout the world.


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