Trade Promotions

Chapter Nine Md Shahedur Rahman

What do we want the consumer and trade to do?

Buy more

Buy NOW!

What is Sales Promotions

Variety of incentive techniques to structure salesrelated programs targeted to consumers, trade and/or sales levels that generate a specific, measurable action or response for a product or service.
Trade Promotions For reselling

Consumer Promotions incentives aimed at a firms customers. They can be end users of the good or service, or they may be other businesses.

Trade Promotions
They are incentives members of the trade channel use to persuade another

member to purchase goods for eventual resale.

Trade promotions are aimed at retailers, distributors, wholesalers, brokers or

agents.
A manufacturer can use trade promotions (TP) to convince another member of the

trade channel to carry its goods.

Difference with CP TPs are not meant for end user or consumers.

Main objectives of TP
Stimulate in-store merchandising

or other trade support

Manipulate levels of inventory held

by wholesalers and retailers

Expand product distribution to

new areas of the country or new classes of trade

Create a high level of excitement

about the product among those responsible for its sale

Trade Promotion Tools

1.

Trade allowances

2.
3. 4.

Trade contests
Trade incentives Training programs

5.
6. 7. 8.

Vendor support programs

Trade shows Specialty advertising Point-of-purchase advertising

Trade Allowances
The purpose of trade allowances is to offer

financial incentives to other channel members in order to motivate them to make purchases.

Trade Allowances
Off-invoice allowances financial discounts given for

each item, case or pallet ordered. Drop-ship allowances money paid to retailer who is willing to bypass wholesalers, brokers, agents or distributors when making preplanned orders. Slotting fees funds charged by retailers to stock new products. 82% retailers charge slotting fees. Exit fees money paid to retailers for them to remove an item from their inventory.

Problems with Trade Allowances

Failing to pass along allowances to

retail customers
The end-customers do not benefit from the

trade allowances in almost half the cases

Forward buying
Retailer purchases extra amounts of a

product while it is on-deal. Then sells it for full-price after the TP period
Diversion
Retailer purchases a product on-deal in

one location and ships it to another location where it is off-deal

Trade Contests
These funds are also known as spiff

money
Prizes offered in such a contest may

include items such as a luggage, a stereo, a television, or a trip to an exotic island. Agents vs. Agents Wholesalers vs. wholesalers Retails store vs. other retail chain

Trade Incentives

These are similar to trade allowances.

The difference is that trade incentives involve the retailer performing a function in order to receive the allowance.

Trade Incentives
1. Cooperative Merchandising Agreement (CMA) 2.

3.

4.
5.

manufacturer pays retailer for advertisements, special displays or price features for its brands. Corporate sales program (CSP) a promotion across a manufacturers total brand portfolio with products usually shipped directly from the factory in ready-to-display pallets. Producing plant allowances (PPA) an incentive to retailer for buying full or half truckloads directly from factory Back haul allowance money paid to retailer for using their own transportation for picking up merchandise Premium or bonus pack free cases of merchandise for placing an order within a specified time period, or for ordering in bulk.

Training Programs
Manufacturers are willing to train

the salespersons at the retailers, because then they will learn more about the brands. This improves the chances that the retail or wholesale salesperson will push the manufacturers brand instead of a competitors products. Having more knowledge about one brand than about others biases salespeople towards that brand.

Vendor Support Programs

Billback program
The manufacturer pays the retailer for special product

displays, advertisements, or price cuts. billback.

Cooperative advertising program
Mturer agrees to reimburse the retailer a certain

percentage of the advertising costs associated with advertising the manufacturers products in the retailers ad.

Trade Shows
Manufacturers pay quite a large

amount for a display at major shows. Opportunity to discover potential customers and sell new products. Relationships with current customers can be strengthened at such shows. Manufacturers salesperson can meet face-to-face with decision makers of businesses.

Categories of Buyers at Trade Shows

1. Education seekers buyers who want to

browse, look and learn only

2. Reinforcement seekers buyers who want

reassurance that they made the right decision in the past

3. Solution seekers I got a problem and I

want solution
4. Buying teams a team of buyers seeking

vendors for their business; usually are in the buying mode

5. Power buyers members of the upper

Specialty Advertising
Also known as giveaways, it can

be an interesting addition to an IMC. Specialty gifts like pens, coffee mugs, calendars, key chains etc. Firms name imprinted on them. Constant reminder of the company no other IMC tool remains with the customer for such a potentially long period of time.

Point-of-Purchase Advertising
It is any form of special display that

advertises merchandise. P-o-P displays are often located near cash registers in retail stores, at the end of an aisle, in a stores entryway, or other places where they will be noticed. P-o-P advertising includes displays, signs, structures, and devices used to identify, advertise or merchandise an outlet, service or product.

Effective P-o-P Displays

Integrate the brands image into the display Integrate the display with current advertising and

promotions
Make the display dramatic to get attention Keep the color of the display down so the product

and signage stand out

Make display versatile so it can be easily adapted by

retailers
Make the display reusable and easy to assemble
Make the display easy to stock Customize the display to fit the retailers store