Types of Sales Promotion - Dealer Promotion

Dealer Promotion Tools

More sales promotion rupees are directed to the trade than to consumers. Manufacturers seek the following objectives in awarding money to the trade:

i.                    Trade promotion can persuade the retailer or wholesaler to carry the brand.

ii.                  Trade promotion can persuade the retailer or wholesaler to carry more than it normally carries.

iii.                Trade promotion can induce the retailers to promote the brand through featuring, display, and price reduction.

iv.                Trade promotion can stimulate retailers and their sales clerks to push the product.

Manufacturers use several promotion tools. Some of which are mentioned below:

Ø Price – Off: Manufacturers may offer a price – off, which is straight discount off the list price on each case purchased during a stated period of time. The offer encourages dealers to buy a quantity or carry a new item that they might not ordinarily buy. The dealers can use the buying allowance for immediate profit or price reductions.

Ø Allowance: Manufacturers may offer an allowance in return for the retailer’s agreeing to feature the manufacturer’s products in some way. An advertising allowance compensates retailers for advertising the manufacturer’s product. A display allowance compensates them for carrying a special display of the product.

Ø Free Goods: Manufacturers may offer free goods, which are extra cases of merchandise to middlemen who buy a certain quantity of items.

Ø Push Money: Manufacturers may offer push money which is cash or gifts to dealers or their sales force to push the manufacturer’s goods.

Ø Speciality Advertising Items: Manufacturers may offer free specialty advertising items to the retailers that carry the company’s name such as pens, pencil, calendars, paper weights, and memo pads.

As the number of competitive sales promotions have increased, friction has been created between the company’s sales force and its brand managers. The sales force says that the retailers will not keep products on the shelf unless they receive more trade promotion money, while the brand managers want to spend their funds on consumer promotion and advertising.