Trading refers to the exchange of goods and services. An organization has to put in all efforts to ensure that its products and services are moving smoothly in the market. Every organization has an intermediary channel through which they reach end customers. Those intermediary channels could be retailers, distributors, agents, etc. Firms come up with a lot of innovative promotional methods to encourage these traders to increase the sales made by them. Some of them could be increased discount slabs for increased sales, extended credit facilities, stock clearance deals, etc. Firms do ensure they connect with all the channel members and roll out the same trade allowances to avoid channel conflicts. Trade allowance or discount is primarily rolled out to traders or resellers, or suppliers to increase the sales through them.
Trade Allowance Tactics
Sales promotion refers to all those activities that are conducted with the target to increase sales. Sales promotion can either be targeted to consumers or distribution channels. Any Promotions that are given to distribution channels are known as trade promotion or trade allowance.
Some of the common trade promotions are as follows:
The Increased Margin of Sale: The arrangement between the manufacturer and the distribution channels involves a margin on sales made by the distributor. As a distributor, they deal with a lot of other brands and products at the same outlet. Hence pushing the retailer or distributor to push the products by offering more money or margin on the sales encourages them to promote that specific brand or product in the market.
Dealer Listings: Firms largely rely on advertisements for promoting their products. Promotion allows them to have huge recognition in the market. Firms may offer the advertising space with their retailer partner to motivate them and increase customer footfall.
Redemptions or Coupons: This is another common technique adopted by firms to increase customers’ footfall into the retail shops. Coupons are attractive to customers because there is an assured goodie or benefit, they are going to get through them. This allows them to walk into stores, and at the same time, the retailer is also motivated to push the firm’s product. This helps to liquidate the stocks.
Goodies and Gifts: Gifts bring thrill and happiness no matter what it is going to be. Rewarding gifts and goodies are the most common tactic, especially in festive seasons. Firms roll out these schemes attached to a specific volume of stock they trade with.
POP Material or Display Racks: Firms can offer Pillar branding, danglers, etc., to retailers to place it in their store to attract customers. They help display the specific products separately. It looks neat and attractive. Retailers do not have to stress more on the product as it is visible to the walk-in customers.
Cash bonuses, stock returns, credit extension, Dealer trophies, References, etc., an extension of support, product demonstration
Benefits of Trade Allowances
Trade allowances promote satisfaction among distributors and thereby are motivated to help the firms by pushing their brand in the market.
Firms can aim at achieving their return on investment at the shortest possible time
Increased brand recognition and market penetration.
Enhances the movement of product, or brand in the market.
If the product details or advertising are highlighted in stores, it becomes difficult for customers to ignore and thereby are tempted to try the product once.
A stronger relationship between distribution channels and the firms.
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