8.12:
Sales Promotion III
Trade-oriented sales promotion strategically targets channel intermediaries to push products to consumers.
It includes tools like trade allowances, cooperative advertising, cash bonuses, credit terms, and push incentives.
Trade allowances are offered to intermediaries by manufacturers in exchange for certain promotional activities.
For instance, a clothing brand offers an advertising allowance to a departmental store to increase product visibility or secure more shelf space.
Cooperative advertising involves manufacturers sharing ad costs with retailers, such as a cosmetics company splitting the price of a magazine ad with a beauty retailer.
Cash bonuses are given to retail sales associates as incentives for selling specific products. An electronics manufacturer may offer cash bonuses to store salespeople for each unit they sell.
Credit terms are provided by manufacturers, enabling retailers to sell products before payment is due, like a bill of exchange.
Lastly, manufacturers offer discounts to retailers, who pass on savings to customers, incentivizing them to purchase.
For example, a toy manufacturer may provide discounts for a store, encouraging customer sales.
8.12 Sales Promotion III
Trade-oriented sales promotion, aimed at intermediaries such as wholesalers and retailers, can be a powerful tool in a company's promotion mix.
It offers advantages, including incentivizing channel partners to push a company's products, which can drive up sales volume significantly.
Trade promotions offer better shelf space, enhancing visibility and potential sales for associated products.
Trade promotions foster loyalty and collaboration, building stronger relationships with channel partners.
Trade promotions accelerate market penetration for new products, motivating retailers to showcase and boost their sales.
On the other hand, Trade-Oriented Sales Promotion also comes with its share of drawbacks.
Trade promotions can be costly, with uncertain return on investment.
Temporary sales boost from trade promotions are often short-lived, with sales returning to previous levels post-promotion.
Relying too heavily on trade promotions can create a dependency among channel partners, resulting in ongoing expectations for incentives that may gradually erode profit margins.
Competition can undermine the effectiveness of your trade promotions if rivals offer similar or superior deals, resulting in a promotional battle with diminishing returns.
In conclusion, trade-focused promotions are powerful for boosting sales and visibility.