Techniques of Trade Sales Promotion

Off-Invoice Allowances

Here marketers allow wholesalers and retailers to deduct a set amount from the invoice they receive for merchandise.

The incentive for the trade with this programme is that the price reduction increases the margin (and profits) a wholesaler or retailer realizes on the off-invoiced brand.

This scheme is in general available for many products, where if the bill amount is above a certain amount you get a certain percentage discount. The % varies from around 2% to 10%, from company to company and also from time to time.

Buying allowance ( Trade Promotion Technique)

It is similar to the off-invoice allowance. It is a discount for the purchase of the promoted product during the specified period on the purchase of certain minimum quantity of the product.  This trade incentive is often used to gain more distribution or to maintain the existing one.

Display and advertising allowance

The retailer is required to arrange the product display in a prominent show-window or offer discount to consumers and advertise this offer in the local newspaper or arrange a point-of-purchase display on the shelf corner. The retailer earns the incentive only after meeting the conditions set by the manufacturer.

Buy back allowance

Manufacturers sometimes announce a buy-back allowance to encourage re-stocking by retailers. This promotion immediately follows another type of deal offered to resellers and offered some incentive for new purchases. When the manufacturer realizes that after the initial deal the inventory levels at the retail level are quite low or depleted, such an offer helps in building the inventory level with retailers to normal. Eg. Bread, thepalas, perishable gds.

Bill back allowance

The manufacturer offers a discount for every item purchased during the promotion period. At the end after the promotion is over, the dealer counts the discount per unit for all the items bought during the promotion period, adds any additional promotional allowances as stipulated by the manufacturer and submits the statement. He also needs to submit the bill for all such items.

Slotting allowance

These are the fees that a retailer charges the manufacturers to make available the space on the shelf for their new products. Retail store owners say that the number of brands in each category is multiplying, there is increasing competition and margins are decreasing, hence they have no option but to ask for a fee to keep the product on their shelf and use the money to improve their shelf design and promotion, etc.

Merchandise allowance

In the form of free products packed with regular shipments, are payments to the trade for setting up and maintaining displays. The payments are typically far less than manufacturers would have to spend to maintain the displays themselves.

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