11.2. Trade-Oriented Promotion

Question 1

Push strategy

Answer 1

manufacturer => reseller => consumer
(promotional effort)

Question 2

Pull strategy

Answer 2

consumer => reseller => manufacturer
(demand creation)

Question 3

trade promotions

Answer 3

• expenditures or incentives used by manuf and channel members to push goods through the channel
• more than 50% of total promotional dollars spent
• to be effective, must be integral part of IMC

Question 4

trade promotions objectives

Answer 4

• obtain initial distribution
• obtain prime retail location or shelf space
• counter competitive activities
• increase order size
• build retail inventories
• reduce excess inventories
• enhance channel relationships

Question 5

Types of trade promotions

Answer 5

• trade allowances
• cooperative adv
• trade contests and incentives
• trade shows specialty advertising
• point-of-purchase displays

Question 6

trade allowances

Answer 6

used by manuf to reward wholesalers and retailers for performing activities in support of the manuf brand

Question 7

trade allowances types

Answer 7

• slotting allowances
• bill-back allowances
• off-invoice allowances

Question 8

slotting allowances

Answer 8

• the fees manuf pays retailers for access to the slot or loaction
• typically when a manuf wants to get its new brand accepted by retailers

Question 9

bill-back allowances

Answer 9

• retailers receive allowances for featuring the manuf brand in advertisements or for providing special displays

Question 10

off-invoice allowances

Answer 10

• rebate paid to retailers for an order
• deals offered periodically to trade that permit wholesalers and retailers to deduct a fixed amount from the invoice

Question 11

problems with allowances

Answer 11

• forward buying
• diverting

Question 12

Diverting

Answer 12

• occurs when manuf restricts a deal to a limited geographical area
• retailers buy large quant at the deal price and then resell the excess quantities in other geographical areas
• product quality potentially suffers due to delays and serious problem could result from product tampering

Question 13

forward buying

Answer 13

• retailers purchase enough products on deal to carry them over until the manufacturer’s next regularly scheduled deal
• retailers savings from FB are not passed on to consumers
• leads to incr distribution cost
• manuf experience reduced margins due to price discounts

Question 14

cooperative advertising

Answer 14

arrangement btw manuf and reseller whereby the manuf pays for all or some of the adv costs undertaken by the reseller

Question 15

cooperative advertising examples

Answer 15

• dairy queen and oreo
• taco bell and Pepsi
• IBM and intel
• radission hotels and TGI Fridays

Question 16

why is co-op advertising used?

Answer 16

• manuf can achieve advertising support on a local-market basis
• provide them with a way to associate their products in the consumers mind with specific retail outlets
• stimulates greater retailer buying and merchandise support
• enables manuf to have access to local media with lower rates

Question 17

trade contests are generally based on…

Answer 17

managers meeting a sales goal

Question 18

trade incentives are given to…

Answer 18

retail managers and salespeople for performing certain tasks

Question 19

push money provide…

Answer 19

financial incentives to retail salespeople to aggressively sell to consumers a selected item

Question 20

specialty advertising

Answer 20

adv and promotions medium that utilizes useful or decorative articles to transmit organizations identification and promotional message to a target audience

Question 21

specialty advertising to

Answer 21

• promote new store openings
• introduce new brands
• motivate salespeople
• improve customer relations

Question 22

Trade shows definiton

Answer 22

temporary forum for seller of a product category to exhibit and demonstrate their wares to present and prospective buyers

Question 23

Trade shows

Answer 23

• servicing present customers
• identifying prospects
• introducing new products
• gathering info about competitors new products
• taking product orders
• enhancing the company’s image

Question 24

POP Displays

Answer 24

• integrate brands image into display
• integrate display with current advertising and promotion
• make it dramatic to get attention
• keep color down to make product stand out
• make it versatile so it can be easily adapted by retailers
• make it easy to stock
• customize display to fit retailers store

Question 25

concerns about trade promotions

Answer 25

• high cost
• tend to be used outside if IMC Plan
• over-reliance on trade promo to push merchandise
• often used for short-term sales goals
• potential erosion of brand image
• impact on small manufacturers