S ALES P ROMOTION - 2 MKT 405: Distribution Management M Wahidul Islam Summer 2014

W HAT IS S ALES P ROMOTION ? “Sales Promotion, a key ingredient in marketing campaigns, consist of a diverse collection of incentive tools, mostly short- term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade” Philip Kotler

T RADE P ROMOTIONS Directed towards the channel members OR Resellers Retailers Wholesalers Distributors Dealers Usually companies spend more money on Trade Promotions than Consumer promotions

O BJECTIVES OF T RADE P ROMOTION Persuade the reseller to carry the company’s product To encourage retailers to promote / support company’s product To encourage retailers to display company’s PoP material To get better shelf space To stock and display new products To make retailers and their sales staff more interested to push the company’s products

T YPES OF T RADE PROMOTIONS

T YPES OF T RADE PROMOTIONS T RADE A LLOWANCES A major type of trade promotion Resellers are offered financial incentives to purchase, promote, display company’s products Different execution types Off-invoice allowance Slotting allowance New Product Placement Promotional / Merchandizing allowance Advertising and sales support activities Drop-ship allowance Exit fees

T YPES OF T RADE PROMOTIONS T RADE C ONTESTS Monetary rewards given to resellers’ sales persons for achieving sales goals Also known as spiff money or push money Can have negative impact on end customers as sales persons may push the wrong product

T YPES OF T RADE PROMOTIONS T RAINING P ROGRAMS & T RADE S HOWS Training Programs Training for resellers to know more about the product’s features, benefits and USPs Can be conducted in separate venue or during the sales person’s visit Trade Shows Trade show / trade fair / exhibitions a useful way of showcasing the product Can convey products benefits to resellers as well as end customers as well

T YPES OF T RADE PROMOTIONS C OOPERATIVE A DVERTISING Cost of advertising is shared by two or more organizations Three types Horizontal Cooperative Advertising Group of retailers providing similar products sponsor a common campaign Vertical Cooperative Advertising Company and retailer together run a campaign Ingredient-sponsored Cooperative Advertising Manufacturers of raw materials and component parts help successful promotion of the end product to the customer.

R EFERENCES Chapter 17 – Sales Promotion Havaldar K. and Cavale V. M. (2011) Sales and Distribution Management – Text and Cases (2 nd Edition) Delhi: Tata McGraw-Hill Education Private Limited

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