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Trade Promotions

Trade Promotions. 10. Chapter Overview. Nature of trade promotions Types of trade promotions Objectives of trade promotions Concerns in using trade promotions. Discussion Slide. Trade Promotions.

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Trade Promotions

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  1. Trade Promotions 10 Chapter Overview • Nature of trade promotions • Types of trade promotions • Objectives of trade promotions • Concerns in using trade promotions Discussion Slide

  2. Trade Promotions • Expenditures or incentives used by manufacturers and channel members to push goods through the channel. • 7% to 10% of sales revenue goes for trade promotions. • Approximately 50% of total promotional dollars spent. • To be effective, must be integral part of IMC program.

  3. Marketing Budgets Advertising 26% Consumer Promotions 24% Trade Promotions 50%

  4. F I G U R E 10 . 2 Trade Promotional Tools • Trade allowances • Trade contests • Trade incentives • Training programs • Vendor support programs • Trade shows • Specialty advertising • Point-of-purchase displays

  5. F I G U R E 1 0 . 3 Trade Allowances • Off-invoice allowance: a per-case rebate paid to retailers for an order. • Drop-ship allowance: money paid to retailers who bypass wholesalers or brokers for pre-planned orders. • Slotting fees: money paid to retailers to stock a new product. • Exit fees: money paid to retailers to remove an item from their SKU inventory.

  6. Disadvantages of Trade Allowances • Failure to pass allowances on to retail customers. • Forward buying. • Diversion.

  7. Trade Contests • Used to achieve sales targets. • Funds known as “spiff money.” • Rewards can be prizes or cash. • Can be designed for various channel members. • Some organizations do not allow trade contests because of possible conflict of interests.

  8. F I G U R E 1 0 . 4 Trade Incentives • Cooperative merchandising agreement (CMA) • Corporate sales program (CSP) • Producing plant allowance (PPA) • Back haul allowance (BHA) • Cross-dock or Pedal runs • Premium or bonus pack

  9. Training Programs • Manufacturer provides training to wholesalers’ or retailers’ salespeople.

  10. Vendor Support Programs • Billback programs • Co-op advertising programs

  11. F I G U R E 1 0 . 5 Cooperative Advertising • Dairy Queen and Oreo cookies • Ace Hardware and Tru-Test Products • Intel and IBM • Toshiba and HP • Motorola and Skytel • J.C. Penney and Reebok • Sprint and Radio Shack • Radisson Hotels and TGI Fridays

  12. Trade Shows • Ranks 3rd in B-to-B marketing expenditures. • Manufacturers spend $70,000-$100,000 per show. • Retailers spend $600 per attendee. • Average trade show had 701 exhibiting firms and 13,431 attendees. • Average ratio of attendees to exhibitors was 19 to 1. • Largest trade shows are: • International CES • The Super Show • Miami International Boat Show & Strictly Sail • International Housewares Show • Mid-America Trucking Show

  13. Trade Shows by Industry General Business (8.3%) Manufacturing (18.6%) Medical (10.3%) Computer (4.6%) Engineering (7.7%) Consumer (11.0%) Food (7.0%) Education (4.6%) Retail/Distributors (15.8%) Communications (5.3%) Source: Danica Vasos, “Industry Profile,” Expo, January 2000, pp. 52-55

  14. F I G U R E 1 0 . 7 Top Categories in Advertising Specialties

  15. F I G U R E 1 0 . 9 Effective POP Displays • Integrate the brand’s image into the display. • Integrate the display with current advertising and promotions. • Make the display dramatic to get attention. • Keep the color of the display down so the product and signage stand out. • Make the display versatile so it can be easily adapted by retailers. • Make the display re-usable and easy to assemble. • Make the display easy to stock. • Customize the display to fit the retailer’s store.

  16. F I G U R E 1 0 . 2 Top Weaknesses of Manufacturer-Supplied POP Displays

  17. STOP INTEGRATED LEARNING EXPERIENCE • Access the following firms that produce POP displays. • Melrose Displays: Http://www.melrosedisplays.com • Visy Displays: Http://www.visydisplays.com • Display Design & Sales: Http://www.displays4pop.com • Acrylic Designs: Http://www.acrylicdesigns.com • Which firm’s Web site is the most attractive? • Which site is the most informative? • Which firm would be the best from the standpoint of the: • Manufacturer? • Retailer?

  18. F I G U R E 1 0 . 1 0 Objectives of Trade Promotions • Obtain initial distribution. • Obtain prime retail location or shelf space. • Maintain support for established brands. • Counter competitive activities. • Increase order size. • Build retail inventories. • Reduce excess inventories. • Enhance channel relationships. • Enhance the IMC program.

  19. STOP INTEGRATED LEARNING EXPERIENCE • What appears to be each agency’s strengths? Weaknesses? • Examine the trade promotion objectives presented in the chapter. Which agency would be the best for each objective? Co-op Communications: Http://www.coopcom.com TradeOne Marketing: Http://www.tradeonemktg.com Sable Advertising: Http://www.sableadvertising.com

  20. Concerns about Trade Promotions • High cost • Tend to be used outside of IMC Plan • Over-reliance on trade promotions to push merchandise • Often used for short-term sales goals • Potential erosion of brand image • Impact on small manufacturers

  21. Building Your IMC Campaign • Decide on the objectives of the trade promotions. • Develop trade promotions for • Wholesalers or distributors • Retailers • Decide on which trade shows to attend. • What type of POP display is necessary and how will retailers be encouraged to use it? • Decide on a co-op advertising program.

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