11.2. Trade-Oriented Promotion Flashcards
Push strategy
manufacturer => reseller => consumer
(promotional effort)
Pull strategy
consumer => reseller => manufacturer
(demand creation)
trade promotions
- 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
trade promotions objectives
- 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
Types of trade promotions
- trade allowances
- cooperative adv
- trade contests and incentives
- trade shows specialty advertising
- point-of-purchase displays
trade allowances
used by manuf to reward wholesalers and retailers for performing activities in support of the manuf brand
trade allowances types
- slotting allowances
- bill-back allowances
- off-invoice allowances
slotting allowances
- 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
bill-back allowances
- retailers receive allowances for featuring the manuf brand in advertisements or for providing special displays
off-invoice allowances
- 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
problems with allowances
- forward buying
- diverting
Diverting
- 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
forward buying
- 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
cooperative advertising
arrangement btw manuf and reseller whereby the manuf pays for all or some of the adv costs undertaken by the reseller
cooperative advertising examples
- dairy queen and oreo
- taco bell and Pepsi
- IBM and intel
- radission hotels and TGI Fridays
why is co-op advertising used?
- 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
trade contests are generally based on…
managers meeting a sales goal
trade incentives are given to…
retail managers and salespeople for performing certain tasks
push money provide…
financial incentives to retail salespeople to aggressively sell to consumers a selected item
specialty advertising
adv and promotions medium that utilizes useful or decorative articles to transmit organizations identification and promotional message to a target audience
specialty advertising to
- promote new store openings
- introduce new brands
- motivate salespeople
- improve customer relations
Trade shows definiton
temporary forum for seller of a product category to exhibit and demonstrate their wares to present and prospective buyers
Trade shows
- servicing present customers
- identifying prospects
- introducing new products
- gathering info about competitors new products
- taking product orders
- enhancing the company’s image
POP Displays
- 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
concerns about trade promotions
- 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
