Types of Trade Oriented Promotions

Last Updated on Tue, 19 Dec 2023 | Marketing Communications

Manufacturers use a variety of trade promotion tools as inducements for wholesalers and retailers. Next we examine some of the most often used types of trade promotions and some factors marketers must consider in using them. These promotions include contests and incentives, trade allowances, displays and point-of-purchase materials, sales training programs, trade shows, and co-op advertising.

Contests and Incentives Manufacturers may develop contests or special incentive programs to stimulate greater selling effort and support from reseller management or sales personnel. Contests or incentive programs can be directed toward managers who work for a wholesaler or distributor as well as toward store or department managers at the retail level. Manufacturers often sponsor contests for resellers and use prizes such as trips or valuable merchandise as rewards for meeting sales quotas or other goals. Exhibit 16-27 shows a contest Chicken of the Sea sponsored for food-service distributors who call on restaurants.

Contests or special incentives are often targeted at the sales personnel of the wholesalers, distributors/dealers, or retailers. These salespeople are an important link in the distribution chain because they are likely to be very familiar with the market, more frequently in touch with the customer (whether it be another reseller or the ultimate consumer), and more numerous than the manufacturer's own sales organization. Manufacturers often devise incentives or contests for these sales personnel. These programs may involve cash payments made directly to the retailer's or wholesaler's sales staff to encourage them to promote and sell a manufacturer's product. These payments are known as push money (pm) or spiffs. For example, an appliance manufacturer may pay a $25 spiff to retail sales personnel for selling a certain model or size. In sales contests, salespeople can win trips or valuable merchandise for meeting certain goals established by the manufacturer. As shown in Figure 16-6, these incentives may be tied to product sales, new account placements, or merchandising efforts.

While contests and incentive programs can generate reseller support, they can also be a source of conflict between retail sales personnel and management. Some retailers want to maintain control over the selling activities of their sales staffs. They don't want their salespeople devoting an undue amount of effort to trying to win a con-

• Product or Program Sales

Awards are tied to the selling of a product, for example: Selling a specified number of cases Selling a specified number of units Selling a specified number of promotional programs

• New Account Placements Awards are tied to:

The number of new accounts opened

The number of new accounts ordering a minimum number of cases or units Promotional programs placed in new accounts

• Merchandising Efforts Awards are tied to:

Establishing promotional programs (such as theme programs) Placing display racks, counter displays, and the like

Figure 16-6 Three forms of promotion targeted to reseller salespeople test or receive incentives offered by the manufacturer. Nor do they want their people becoming too aggressive in pushing products that serve their own interests instead of the product or model that is best for the customer.

Many retailers refuse to let their employees participate in manufacturer-sponsored contests or to accept incentive payments. Retailers that do allow them often have strict guidelines and require management approval of the program.

Trade Allowances Probably the most common trade promotion is some form of trade allowance, a discount or deal offered to retailers or wholesalers to encourage them to stock, promote, or display the manufacturer's products. Types of allowances offered to retailers include buying allowances, promotional or display allowances, and slotting allowances.

Buying Allowances A buying allowance is a deal or discount offered to resellers in the form of a price reduction on merchandise ordered during a fixed period. These discounts are often in the form of an off-invoice allowance, which means a certain per-case amount or percentage is deducted from the invoice. A buying allowance can also take the form of free goods; the reseller gets extra cases with the purchase of specific amounts (for example, 1 free case with every 10 cases purchased).

Buying allowances are used for several reasons. They are easy to implement and are well accepted, and sometimes expected, by the trade. They are also an effective way to encourage resellers to buy the manufacturer's product, since they will want to take advantage of the discounts being offered during the allowance period. Manufacturers offer trade discounts expecting wholesalers and retailers to pass the price reduction through to consumers, resulting in greater sales. However, as discussed shortly, this is often not the case.

Promotional Allowances Manufacturers often give retailers allowances or discounts for performing certain promotional or merchandising activities in support of their brands. These merchandising allowances can be given for providing special displays away from the product's regular shelf position, running in-store promotional programs, or including the product in an ad. The manufacturer generally has guidelines or a contract specifying the activity to be performed to qualify for the promotional allowance. The allowance is usually a fixed amount per case or a percentage deduction from the list price for merchandise ordered during the promotional period.

Slotting Allowances In recent years, retailers have been demanding a special allowance for agreeing to handle a new product. Slotting allowances, also called 547

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Readers' Questions

  • Lucie Stewart
    Which of the following is a similarity between trade sales promotion and consumer sales promotion?
    1 month ago
    • Both trade sales promotion and consumer sales promotion aim to increase sales and promote a product or service.
    • gerardina
      What i'd trade incentives in tradeoriented sales promotions?
      2 months ago
      • In trade-oriented sales promotions, brands often provide incentives to trade partners or resellers to encourage them to sell more products. These incentives can vary depending on the specific goals of the promotion and the target market. Here are some common incentives used in trade-oriented sales promotions:
      1. Volume-based discounts: Brands may offer discounts or rebates to trade partners based on the volume of products they sell during a specific period. This encourages resellers to push more sales and stock higher quantities.
      2. Bonus merchandise: Brands may offer additional products or merchandise as a bonus to trade partners who achieve certain sales targets. This could be a limited edition item, exclusive packaging, or new product offerings.
      3. Cash incentives: Brands provide monetary rewards to trade partners who achieve certain sales goals. These could be in the form of cash rewards, bonuses, or commissions based on the sales performance.
      4. Free product samples: Brands may offer free samples of new products or variations to trade partners to generate interest and encourage them to promote them to customers.
      5. Training and support: Brands may provide specialized training, support, or resources to trade partners to enhance their selling skills and product knowledge. This helps resellers to better promote and sell the products.
      6. Point-based reward programs: Brands develop point-based systems where trade partners earn points for each product sold. These points can later be redeemed for various rewards such as gift cards, electronics, travel vouchers, or exclusive experiences.
      7. Advertising support: Brands may offer advertising support to trade partners, such as funding for local advertisements, co-branded promotions, or assistance with marketing materials. This helps trade partners to attract more customers and increase sales.
      8. Exclusive partnerships: Brands may offer exclusive distribution rights or preferential treatment to trade partners who consistently achieve high sales targets. This provides them with a competitive advantage and strengthens the brand-reseller relationship.
      9. Contest and competition rewards: Brands may organize contests or competitions among trade partners, with rewards such as trips, prizes, or recognition for top performers. This creates a sense of competition and motivates resellers to increase their sales efforts.
      10. Extended payment terms: Brands may offer trade partners extended payment terms or favorable financing options, allowing them to have greater flexibility in managing their cash flow while promoting higher sales volumes.
        11. The choice of incentives will depend on the brand's objectives, budget, and the desires of the trade partners. It is important to constantly evaluate the effectiveness of the incentives and adapt them as needed to drive desired sales outcomes.
      • sophie
        Which promotional tool includes presentations, trade shows, and incentive programs?
        12 months ago
        • Promotional tool: Event Marketing
        • Bertoldo
          What type of sales promotion techniques are used at trade shows?
          1 year ago
          1. Discounts: Offering discounts and promotional prices on products and services can be a great way to draw attention and entice customers to purchase.
          2. Samples: Giving away samples and demonstrations of products and services provide prospective customers with an opportunity to try before they buy.
          3. Raffles and Contests: Offering chances to win prizes or gifts can be a great way to draw attention and encourage customers to engage with your booth and products.
          4. Freebies: Giving out promotional items such as pens, bags, and other products with your logo on them is an effective way to get your brand noticed.
          5. Special Presentations: Scheduling special presentations by experts in the field, hosting product launches, and running workshops can also be a great way to draw traffic to your booth.
          • flavia
            Which of the following is a promotion tool used for trade promotions?
            1 year ago
            • Sales Contests, Rebates, Discounts, Sweepstakes, Sampling, and Coupons.
            • carola
              WHAT IS TYPES OF TRADE ORIENTED PROMOTIONS &ADVANTAGES OF SALES PROMOTION?
              1 year ago
              • Trade-oriented promotions are promotions that are targeted towards the trade channel, such as retailers, wholesalers, distributors, or other intermediaries involved in the distribution of a product. These promotions are aimed at encouraging increased sales and cooperation from trade partners. Here are some types of trade-oriented promotions: 1. Trade discounts: These are price reductions offered to trade partners for purchasing or stocking a certain quantity of products. It motivates retailers or wholesalers to buy in bulk or carry larger stock levels. 2. Trade allowances: These are financial incentives provided to trade partners for performing certain functions or activities, such as offering shelf space, promoting the product through advertising, or providing special displays. 3. Cooperative advertising: Manufacturers share the cost of advertising campaigns with their trade partners. This can include providing funds for advertising materials, local media advertising, or joint promotions. 4. Point-of-purchase displays: Manufacturers may provide promotional materials, such as banners, standees, or product display racks, to attract consumer attention at the point of purchase in retail stores. 5. Trade shows and exhibitions: Manufacturers participate in trade shows or exhibitions to showcase their products, generate interest among trade partners, and establish business relationships. Now, let's discuss the advantages of sales promotion:
              1. Increased sales: Sales promotions can effectively drive immediate sales volumes, especially in the short term. Offering discounts or other incentives can encourage customers to make a purchase or try a new product.
              2. Enhanced brand awareness: Through sales promotions, brands can create buzz and generate interest in their products. This can result in increased brand visibility, recognition, and awareness among consumers.
              3. Customer acquisition and retention: Sales promotions can attract new customers by offering incentives and discounts. Additionally, they can also retain existing customers by rewarding loyalty or encouraging repeat purchases.
              4. Competitive advantage: By offering unique promotions or exclusive deals, brands can gain a competitive edge over their competitors in the market. It allows them to differentiate their offerings and attract customers away from their rivals.
              5. Inventory management: Sales promotions can help clear excess inventory or stock, reducing carrying costs and the risk of obsolescence. It enables businesses to maintain healthy inventory levels and avoid losses.
              6. Data collection: Sales promotions often require customers to provide their contact details or engage with the brand, which allows businesses to collect valuable data for future marketing efforts and customer relationship management.
                7. It is important to note that while sales promotions can offer significant benefits, they should be carefully planned and executed to avoid damaging brand equity or eroding profitability in the long term.
              • amalda
                What is trade oriented sales promotional tools?
                1 year ago
                • Trade oriented sales promotional tools are promotional activities that are designed to increase sales with business partners or customers in a trade setting. These tools can include discounts, coupons, advertising, in-store displays, and contests. They are typically aimed at increasing product visibility and creating demand among buyers.
                • shannon
                  What are types of tradeoriented sales promotins?
                  1 year ago
                  1. Point-of-Purchase Promotions
                  2. Trade Shows and Conferences
                  3. Special Events
                  4. Quantity Discounts
                  5. Product Sampling
                  6. Trade Allowances
                  7. Training and Education Programs
                  8. Co-Branding Promotions
                  9. Advertisement and Media Incentives
                  10. Whip Arounds
                  • taziana
                    What is condumer oriented and trade oriented sales promotion?
                    1 year ago
                    • Consumer-oriented sales promotion refers to various tactics used to persuade a consumer to buy a product or service. This includes coupons, free samples, contests, product demonstrations, and discounts. Trade-oriented sales promotion is targeted towards intermediaries such as retailers and wholesalers. This includes allowances, promotional pricing, point-of-purchase displays, trade shows, and display materials.
                    • aili viinikka
                      What is meant by tradeoriented sales promotion?
                      1 year ago
                      • Trade-oriented sales promotion is a type of promotional activity in which promotional efforts are directed toward members of the distribution system (retailers, wholesalers, etc.) rather than the end-consumer. These activities may include discounts, free samples, displays, trade shows, advertising, sales contests or other incentives to encourage sales of the product.
                      • zewdi
                        Which of the following are common trade promotion​ tools?
                        1 year ago
                        1. Sampling
                        2. Coupons
                        3. Trade shows
                        4. Advertising
                        5. Point-of-Sale Displays
                        6. Contests and Sweepstakes
                        7. Trade Allowances
                        8. Rebates
                        • esme alexander
                          Which of the following is true of tradeoriented sales promotion?
                          1 year ago
                          • Trade-oriented sales promotion is designed to encourage buyers such as retailers and wholesalers to purchase a product or service. It can include a range of incentives such as discounts, contests, free samples, price-offs, and other forms of short-term discounts.
                          • sofia
                            What are the type of trade oriented promotion?
                            1 year ago
                            1. Price Promotion: Offering discounts, coupons and other price related offers to drive sales.
                            2. Trade Advertising: Advertising to the trade that can be used by retailers to promote products.
                            3. Product Sample: Providing retailers with samples of new products for them to try out and ultimately promote to their customers.
                            4. Trade Contests: Offering incentives such as contests and loyalty programs to retailers to help drive sales.
                            5. Coupons: Offering coupons and special deals to customers to encourage them to purchase a particular product.
                            6. Trade Show Participation: Participating in trade shows to gain exposure and build relationships with retailers, distributors and customers.
                            7. Trade Deals: Negotiating volume discounts and other deals with retailers to encourage bulk purchases.
                            8. Trade Promotions: Implementing creative promotions such as marketing events, special events, demos and more to drive sales.
                            • Toini
                              What is trade oriented sales promotion?
                              1 year ago
                              • Trade-oriented sales promotion is a type of promotion aimed at encouraging retailers to carry a product. Examples of trade-oriented sales promotion include price discounts, free product samples, displays, special POP materials, and demonstrations. These tactics are designed to drive sales through retail channels and ultimately increase a product’s market share.
                              • SARAMA
                                What are the techniques for tradeoriented sales promotion that marketing managers often consider?
                                1 year ago
                                1. Cash Discounts: Offering customers a discount for purchasing a product or service in cash is one of the most common techniques for trade-oriented sales promotion.
                                2. Loyalty Programs: Loyalty programs are a popular technique for trade-oriented sales promotion. Loyalty programs reward customers for their repeat purchases, offering discounts, freebies or other incentives to encourage them to come back.
                                3. Coupons and Codes: Offering customers coupons or promotional codes that they can use to redeem discounts or freebies with their purchase is another technique for trade-oriented sales promotion.
                                4. Point of Purchase Displays: Having an eye-catching point of purchase display is an effective way to draw attention to your product or service and promote sales.
                                5. Contests and Giveaways: Contests and giveaways are another popular technique for trade-oriented sales promotion. These can be used to encourage customers to make purchases and reward them for doing so.
                                6. Trade Shows and Expos: Trade shows and expos are great opportunities for businesses to network and promote their products and services to potential customers.
                                • logan
                                  What are the types of trade oriented promotion?
                                  1 year ago
                                  1. Trade Fairs: Trade fairs are events where companies showcase their products or services to potential buyers.
                                  2. Advertising: Advertising is a form of promotion that uses paid media channels (e.g. TV, radio, print, digital) to reach a target audience.
                                  3. Sales Promotions: Sales promotions are short-term incentives offered to customers to encourage a purchase. Examples include coupons, discounts, and free gifts.
                                  4. Personal Selling: Personal selling involves a salesperson using interpersonal communication to persuade customers to buy a product or service.
                                  5. Public Relations: Public relations is the practice of building relationships with the public and media to create a favorable view of a company or product.
                                  6. Trade Shows: Trade shows are similar to trade fairs, but they focus more on industry-specific products and services.
                                  7. Direct Marketing: Direct marketing is the use of direct communication with potential customers to promote a product or service. Examples include mailings, emails, and text messages.